Eurozone Crisis

Debt  crisis in the eurozone raises again the debate that has emerged more than 10 years. Euro single currency it worth running? Another question, can the economic system of the United States with U.S. dollars applied in the eurozone single currency the euro?

Jacques Lucien Jean Delors (86) used to doubt it. French economist and politician currently serves as President of the European Commission (now European Union) in the period 1985 to 1995. The reason, difficult for some countries have a single currency without a surrender of sovereignty to the EU headquarters in Brussels, Belgium.

Single Currency in Eurozone


Delors warned, the use of a single currency with only one central bank (European Central Bank / ECB) is not sufficient if not accompanied by an economic policy.

One currency is implicitly a single flag, while the eurozone comprises 17 countries with different flags and different economic and political policies. Relative EU or the euro zone is only one view about foreign policy, not in terms of economic policy and politics.

German news website Deutsche Welle (DW) in September 16 issue of re-interviewed Martin Feldstein is also related to similar issues. Similar issues are also written in the U.S. daily Washington Post issue of 24 September. He is Chairman of the Council of Economic Advisers (1982-1984) under President Ronald Reagan.

Feldstein is also a member of the Advisory Council of Economic Recovery in 2009 was appointed President Barack Obama.

DW recalled an article that was ever written Feldstein in 1997 or five years before the euro actually physically used (2002).

At that time, Feldstein concludes the euro will give birth to great friction in the eurozone, whose members now grown to 17 countries-initially from 11 countries.

Economics professor from Harvard University, USA, provides vivid examples of why the euro resulted in friction. "Germans love to save, while Greece was busy To consume," said Feldstein.

Greece will be released from Eurozone

Feldstein has long questioned the premise behind the intention of the use and application of the euro, and only had to see the success of United States of America, which is expected to give birth United States of Europe.

"The U.S. has an economic policy, one government, and the free flow of goods, citizens of one state to another state. Things like this do not automatically occur in the eurozone because of different cultures and languages ​​that hinder the free flow of goods and services, "said Feldstein.

"What is happening now in the eurozone is a political conflict that has been predicted long ago," he said. He was referring to the accusation of German citizens and politicians that the Greek economy has helped to drag them. On the other hand, the Greek judge, Germans are not in solidarity as a fellow member of the eurozone.

One weakness of the euro single currency is the bias factor of market information. For 10 years Greece has a stable euro, low inflation. Greece considers the stability of the euro and the low inflation euro as economic performance, but they hide behind the success of Germany.

He gave an example, the stability of the euro, all countries using the euro could borrow money euro low-interest long. Low interest is advantageous Greece, which economic productivity is very low when compared to Germany with high productivity. "These things still hold true today," said Feldstein.

Greek economic policy is not careful the eurozone does not look dangerous when the amount owed is still very small. Today, Greece is a large accumulation of debt, followed by similar problems in Portugal and Ireland. Simultaneously, this causes big problems in the eurozone, the debt crisis that has rocked the stability of the euro exchange rate.

Related to that, Feldstein estimates that Greece will return to the old currency drachmas. Greece will also be forced to perform the task yourself with a clean economy.

He estimates that the eurozone will not survive with existing members today. Euro still exist, but the number of members will be reduced. He said the euro zone or the euro single currency can only exist if all member states have an economic policy which is relatively uniform and uniform also about economics.

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