Judging by the debate raging in Europe, there are only two options for fixing the problems of the eurozone’s struggling economies austerity or growth.
The experience of the Asian crisis of 1997-98, however, suggests that this is a false choice. What happened back then is very similar to what is happening in Europe today after relying on foreign investors to fund savings shortfalls during a period of loose credit and over-investment, that support has now evaporated, leaving the exposed countries to address their savings shortfalls internally.
Rebalancing has to happen one way or another, and the result is an inevitable decline in economic activity...
¬ Haymarket Media Limited. All rights reserved.
