Prodigal Italy, Greece, Spain? A Letter to Northern Partners

Michael Haliassos presents a key dilemma in the current debate regarding the future of the Euro: to prolong support of debt refinancing to countries in the periphery, so as to signal to markets that Euro membership is a one-way street; or to cut it off, so as to discourage other eurozone members from letting their finances get out of control in the future? He argues that the answer crucially depends on the way that northern partners perceive the prospects of citizens in the periphery to work hard and to be prudent with their finances. Recently available data on hours of work and on household net wealth levels suggest that basing this choice on preconceptions and stereotypes may be leading to counter-productive measures that put the eurozone at risk.
The article, originally written as Editorial for the Newsletter of the Center for Financial studies, appeared also in the German newspaper Frankfurter Allgemeine Zeitung (23.12.11) and in the Greek newspaper Kathimerini (24.12.11). The full text and Table in English here.

About M_Haliassos

Goethe University Frankfurt

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One Response to Prodigal Italy, Greece, Spain? A Letter to Northern Partners

  1. Here is a summary of a minority opinion on the Greek crisis. Minority opinion in the sense that it does not consider the private sector participation in the debt crisis as a mistake and it does not consider the non-issue of Eurobonds so far as a mistake.

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