“Economists exert a minor and scarcely detectable influence on the societies in which they live.“(George Stigler)
The mess in the European currency area continues, and the Euro isn’t out of the woods yet. The three trouble areas infecting one another continue to smolder: a number of countries in the EU continue to be less competitive, debt is once again too high almost everywhere, and many banks are still undercapitalized. The threefold crisis in the Eurozone is being driven by multiple “moral hazards“, those of the politicians, voters and bankers (here). They had their beginnings in the periphery, in the PIIGS. The (German) center and the ECB saved the EMU from the collapse. This interpretation of the euro-crisis is, however, becoming less important and is held less and less commonly in politics and the media. The attempt to gloss over the story of the crisis is made much more often. The victim is now the periphery, and Germany in particular1 is the culprit. “Germany-Bashing“ is meanwhile fashionable throughout Europe. Even American economists, like Alan Blinder and Paul Krugman, take part in the witch hunt against an “aimlessly wandering“ Germany.