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2014-07-07

Ferdinando Giugliano?

Ferdinando Giugliano is the FT’s global economy news editor.

Unhappy Union: How the Euro Crisis – and Europe – Can be Fixed,
Book by John Peet and Anton La Guardia, journalists from The Economist.
Review by Ferdinando Giugliano, FT 6 July 2014

As La Guardia and Peet argue, the eurozone’s politicians made a serious conceptual mistake in confronting the turmoil that entangled Greece and the rest of the bloc’s periphery.

Policy makers assumed the crisis was the consequence of the lack of en­forcement of fiscal rules but “it was property bubbles, imbalances and the unstable structure of the eurozone”.

Was the euro introduced prematurely? La Guardia and Peet think so. “Monetary union should have been the culmination of political union, not the means to achieve it,” they write.

But while it is tempting to blame the single currency, Europe’s woes were mainly the result of the authorities’ incompetent crisis response.

A break-up would set off a wave of de­faults. Companies in weaker countries would struggle to repay euro-denominated debts using steeply devalued national currencies.

As the authors suggest, the calm that has prevailed in the bloc’s markets for the past year is largely the result of the European Central Bank’s promise to buy unlimited quantities of sovereign bonds

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