By Kermit Schoenholtz, Professor of Management Practice and Director of the Center for Global Economy and Business, Thomas Cooley, Paganelli-Bull Professor of Business and International Trade & Matthew Richardson, Charles E. Simon Professor of Applied Economics, Sidney Homer Director, Salomon Center for Research in Financial Institutions and Markets and Professor of Finance
December 21, 2011
There is only one relevant question with respect to last week's summit in Europe on saving the euro: Is it enough to halt or reverse the run on the European banking system?
Not even close.
Last week's attempt at fiscal union looked eerily familiar to rules already in place in the original Maastricht treaty that led to the euro. While last week's rules did have more enforcement bite, measured against the scale of the ongoing crisis, and against the failures of the past, the summit represented just baby steps.
And if these steps are sufficient to solve the fiscal and banking problems of countries like Greece, Portugal, Spain and Italy, then all we can say is: Te salut Merkozy.
Instead, both short-term measures and more wide-scale long-term structural changes are necessary to make the euro-zone area stable.
Read full article as published in The Huffington Post