Euro : the time of reassessing it has come (Fifteen lessons and six conclusions)

Working paper in french.

The Eurozone is clearly† in a time of crisis.  H‚ow“ever the liquidity† crisis it is facing no“w, for all its urgency†, is just the result of a deeper and longer internal competitiveness one. This crisis has been the result of mak›ing a monetary† union before and “without building a federal state. BŸut building a federal state is at best a long and probably† painful undertak›ing, “whose success is not guaranteed. As a result the deepening of the crisis has been tremendous in the last months.

One solution now“ seen is the so-called « federalist jump » but this describe actually† only† mak›ing federal rules on expenditures and not sharing the revenue side.  It is not to “work› both for political and economic reason. W‰e survey† also the potential issue of an asy†mmetric German inflation and found it a non-starter. This is letting the Eurozone onl†y w“ith “age-deflation policies, w“hich are reminiscent of deflationar†y policies implemented in the early† 30 ™Œ’s w“ith disastrous effect.  In this situation the onl†y sensible solution look›s to be a coordinated dismantling of the Eurozone.