Not Even Close...
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
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.
More Opinions from Kermit Schoenholtz
- "Europe Needs a Credible Deflation Strategy," 1.15.14
- "Who Will Carry the Water?," 1.25.13
- "The Euro: Bad Idea, Poorly Executed, Hard to Fix," 10.15.12
- "Taking the L-I-E Out of Libor," 7.26.12
- "Europe’s Banks Need a TARP of Their Own," 6.19.12
- "The Euro Exit," 6.14.12
- "How Shape-Shifting Banks Foil Dodd-Frank Act," 4.17.12
- "Will Europe Flunk Stress Tests?," 3.14.12
- "The Battle Over Money Funds" 3.7.12
- "The Fed as Inflation Targeter," 1.26.12
- "Toward an Even More Transparent Fed," 1.24.12
- "Not Even Close...," 12.21.11
- "Euro’s Fall May Doom All," 12.8.11
- "What Hamilton Can Teach the Euro Zone," 12.8.11