Spiegel Online: Eichengreen – ‘it is the banks that are the problem’


Via Politics.ie – Spiegel Online: Interview With US Economist Eichengreen ‘Europe’s Banks Are in Far Greater Danger Than People Realize’

Eichengreen: Plan A has failed. Now they have to switch to Plan B. They must stop attempting to combat the crisis in Greece and Ireland by forcing these countries to pile more debt onto their existing debts by saddling them with overpriced loans
The present bailout attempts have never made sense. Essentially, all Germany and France want to achieve with these measures is to protect their own banks from collapsing. Now people are beginning to realize that there is no way around rescheduling Greece’s debt — and that will also involve the banks. For this to happen, there is only one solution: Europe needs to strengthen its banks! Greece lived beyond its means, but in Ireland and Spain it is the banks that are the problem. The euro crisis is first and foremost a banking crisis
There are no cheap solutions. My main concern is that Europe will choose a middle path again, for example by making the interest and terms on loans to Greece and Ireland more tolerable. Europe’s leaders wouldn’t be wrong in doing that, but it would fall far short of what is needed to save the euro.

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This entry was posted in Accountability, Bankers' Bailout, Budget, Debt Default/Restructuring, ECB/IMF, Economy, EU, Geopolitics, Irish America, Solutions and tagged , . Bookmark the permalink.

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