Crisis in the Eurozone. Costas Lapavitsas

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       Sovereign debt rises

       A hothouse for speculation

       7 Political economy of alternative strategies to deal with the crisis

       Austerity, or imposing the costs on workers in peripheral countries

       Reform of the eurozone: Aiming for a ‘good euro’

       Exit from the eurozone: Radical social and economic change

       PART 2: THE EUROZONE BETWEEN AUSTERITY AND DEFAULT

       8 Introduction

       9 A profusion of debt: If you cannot compete, keep borrowing

       The magnitude of peripheral debt

       The economic roots of external debt

       The composition of peripheral debt: Domestic financialisation and external flows

       10 Rescuing the banks once again

       Banks in the eye of the storm

       Funding pressures on European banks

       The European support package and its aims

       The chances of success of the rescue package

       11 Society pays the price: Austerity and further liberalisation

       The spread of austerity and its likely impact

       The periphery takes the brunt of austerity policy

       Mission impossible?

       12 The spectre of default in Europe

       Default, debt renegotiation and exit

       Creditor-led default: Reinforcing the straitjacket of the eurozone

       Debtor-led default and the feasibility of exit from the eurozone

       APPENDIX 2A THE CRISIS LAST TIME: ARGENTINA AND RUSSIA

       The Washington Consensus brings collapse to Buenos Aires

       Some lessons from Argentina

       Russia’s transition from a planned economy: Collapse and recovery

       Default is not such a disaster, after all

       Appendix 2B Construction of aggregate debt profiles

       Greece

       Appendix 2C Decomposition of aggregate demand

       PART 3: BREAKING UP? A RADICAL ROUTE OUT OF THE EUROZONE CRISIS

       13 Hitting the buffers

       A global upheaval

       The euro: A novel form of international reserve currency

       The euro mediates the global crisis in Europe

       14 Monetary disunion: Institutional malfunctioning and power relations

       The ECB and the limits of liquidity provision

       EFSF and ESM fumbling

       15 Failing austerity: Class interests and institutional fixes

       Virtuous austerity: Hurting without working

       Desperately searching for alternatives

       16 Centrifugal finance: Re-strengthened links between banks and nation states

       The re-strengthening of national financial relations

       Greek banks draw closer to the Greek state

       17 The social and political significance of breaking up

       The context of rupture

       Modalities of default

       18 Default and exit: Cutting the Gordian knot

       Greece defaults but stays in the EMU

       Greece defaults and exits the EMU

       In lieu of a conclusion

       Index

      PREFACE

      The storm buffeting the common currency of Europe is an integral part of the great crisis that commenced in 2007. Barely five years after bank speculation in the US real estate market had caused international money markets to freeze, three peripheral countries of the eurozone were in receipt of bailout programmes, Greece was on the brink of exiting the monetary union, and the mechanisms of the euro faced breaking pressure.

      The causal chain linking US financial market turmoil to European Monetary Union instability has been analysed by several economists, including those authoring the present book. Summarily put, the collapse of Lehman Brothers in 2008 led to a major financial crisis that ushered in a global recession; the result was rising fiscal deficits for several leading countries of the world economy. For countries in the eurozone periphery, already deeply indebted after years of weakening competitiveness relative to the eurozone core, fiscal deficits led to restricted access to international bond markets. Peripheral states were threatened with insolvency, posing a risk to the European banks that were among the major lenders to the periphery. To rescue the banks, the eurozone had to bail out peripheral states. But bailouts were accompanied by austerity that induced deep recessions and rendered it hard to remain in the monetary union, particularly for Greece.

      The threat to the euro would perhaps have been understood earlier had more attention been paid to history. In 1929 speculation in the New York Stock Exchange induced a crash that led to global recession; by 1932 it had become necessary to abandon the gold standard that had only been reintroduced in 1926. The recessionary forces in the world economy had grown vast in part because states had been trying to protect gold reserves and associated fixed exchange rates. It became impossible to cling on to the rigid system of metallic world money.

      The European Monetary Union, needless to say, is quite different from the gold standard. It is a system of managed money that is free from the blind СКАЧАТЬ