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Friday, August 09, 2013 3:06 AM

Ambrose Evans-Pritchard's Disingenuous Strawman "Defend Europe, If You Still Dare"

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Inquiring minds are reading the Telegraph article "Defend Europe, If You Still Dare" by Ambrose Evans-Pritchard.

The youth jobless rate in Greece has just reached 64.9pc.

Little to add. This is pure policy error. Europe has needlessly pushed the whole EMU bloc into a deep double-dip recession, and the longest unbroken contraction since World War Two.

Keynesians warned them. Monetarists warned them. Anbody with any common sense warned them, but no, they believed in their quack theories of expansionary fiscal contraction — even when conducted without the anaesthetic of monetary stimulus.

European policymakers are like the generals of Verdun, the Somme, and Passchendaele, sending their youth straight into the barbed wire.

Europe's leaders still blame this crisis on America. You can only laugh or cry.

Is anybody on this comment thread really willing to defend EMU any longer?
Message to Ambrose

Yes, Ambrose, the Monetarist and the Keynesians did indeed warn Brussels. The Austrians warned Brussels as well. So did the eurosceptics. So stop pretending Keynesian or Monetarist policy was the right response.

The problems in Europe are structural and many. The euro is a structural problem, the "one size fits Germany" interest rate policy by the ECB is a structural problem, trade deficit settlement via Target 2 mechanisms is a structural problem.

Work rules, pensions, and unions are a structural problem of varying magnitude in various countries, with Greece, Italy, Spain, and France at the top of the list.

European policymakers are indeed "like the generals of Verdun, the Somme, and Passchendaele, sending their youth straight into the barbed wire".

However, spending money countries do not have can hardly be a solution to those structural issues! Pray tell Ambrose, what good would it do? What problems does it fix?

The same applies to monetarist idiocy of printing more money and having all of it sit as excess reserves at banks. 

It is the Austrian-eurosceptics that have it right. The eurozone needs to break up. Greece, France, Italy, Spain, and Portugal are in serious need of work rule reform, pension reform, and public sector reforms of all sorts.

Instead you pour it on as if the Keynesians and Monetarists had something other than can-kicking exercises in mind. They don't and you don't either which is quite sad given you were one of the original euroscpetics.

Mike "Mish" Shedlock

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