Tuesday 8 May 2012

Doom to the Euro


The next time I teach a class on monetary union or international finance, I will be sure to show this graph from the Atlantic.

"Here is what this chart shows. Compared across more than 100 factors measured by the World Economic Forum Global Competitiveness Report, from corruption to deficits, JP Morgan analyst Michael Cembalest calculates that the major countries on the euro are more different from each other than basically every random grab bag of nations there is, including: the make-believe reconstituted Ottoman Empire; all the English speaking Eastern and Southern African countries; and all countries on Earth at the 5th parallel north."

No argument from me. Keeping the Euro currency afloat with this many dissimilar countries is like forcing square pegs into round holes.



1 comment:

  1. There is a core group of autistic neoliberal technocrats who push monetary union as a good idea because it fits their value judgement of what constitutes an efficient and effective economic model. While Mundell perhaps gets too much credit as one of the pre-eminent economists of our time his four conditions for an optimal currency area: flexible wages and prices; mobile labour; reasonably correlated economies; and a fiscal transfer union, remain sound. Peter Mandelsohn wrote an awful piece in the May 4 FT titled "Britain should still consider joining the euro" In the interest of fairness and giving voice to other ideas (however stupid) here is the link: http://blogs.ft.com/the-a-list/2012/05/04/britain-should-still-consider-joining-the-euro/#axzz1uIjDvvcv

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