Since the Eurozone descended into despair in the aftermath of the Global Financial Crisis, Germany has awarded itself the position of chief economic lecturer.
As students from Monash and Melbourne converged on the heart of Clayton campus for the inaugural ESSA Monash versus Melbourne Economics debate, the tension crackling in the air was palpable. For the Melbourne team, losing to the new kids on the block would be an irrevocable stain on their self-perception. For the Monash team, the desire to reign supreme on their turf was a powerful driving force. The topic ‘The Eurozone Project is a Failure’ provided ample scope for intellectual sparring.
In an affirmation of the natural order of things, on Thursday night out at Monash University, the University of Melbourne team (composed of myself, 1st-year student Emad, and the incomparable Prof. Jeff Borland) took out a closely fought debate to determine whether the Eurozone has been a success or a failure. Across both teams there was much spirited debate over economic theory, the optimal design for policymaking interlaced with a great deal of jibing back and forth between two of the country’s most elite universities.
If we remember back to the days of the global financial crisis, one of the earliest and hardest hit countries in the European area was Iceland. Iceland was also the only country which made the fateful decision to not bailout the three largest banks in their country. This was not because they simply said ‘no’ like they did afterwards to the demands of the creditors of these banks in the UK and the Netherlands, but they simply could not afford to bailout these banks which held 10 times GDP worth of assets. By choosing not to bailout the banks it didn’t mean the domestic financial payments system collapsed as well, and without good reason detailed further in the article.
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This week: Austerity is supposed to reduce debt and stabilise recessions – but has it worked? Also why Australia’s macro policies have been successful, and the case for legalising prostitution.
ESSA, 14 October 2012
The Greek tragedy began with its declining competitiveness in the early 2000’s. Simply put, they were producing far less than they were consuming. Many factors lead to this including their adoption of the Euro (see Hungy’s article here). Some have pointed out the irony of too much Democracy from the people who invented it: pensions rose, retirement age lowered, and public sector salaries increased. This explanation has formed the view of the Greek people as lazy and unproductive, a label which is misinformed.