ECONOMISTS: ‘Europe Is Sleepwalking Toward A Disaster Of Incalculable Proportions’
Jul. 25, 2012
BERLIN (Reuters) – The eurozone faces economic disaster unless its financially stronger states and its central bank commit to bearing a larger share of the region’s debt burden, leading global economists including two advisers to the German government said.
“We believe that …Europe is sleepwalking toward a disaster of incalculable proportions… The sense of a never-ending crisis, with one domino falling after another, must be reversed,” the Institute for New Economic Thinking (INET), backed by veteran investor George Soros, wrote in its report.
Policymakers must tackle two problems separately – dealing with the legacy costs of the “initially flawed design” of the euro zone, and fixing the structure of the bloc itself.
Among their recommendations, the economists called for an early partial mutualisation of the region’s debt – which Germany has refused to consider – and the eventual creation of a supranational financial watchdog with authority over national regulators.