Stephen Kinsella: We need to lobby our way out of euro crisis
WHY is it that Europe's leaders can't agree on a course of action to steer the eurozone out of its difficulties? Everyone is aware of the problem: debt build-ups in the private household and business sectors caused by inappropriate interest rates and facilitated by feckless, badly regulated banks ended in a banking crisis. The banks needed support from the member states, which required sovereign borrowing, and so the damage spread from the private balance sheets to the public one.
Excessive stocks of debt are reducing any chance of growth, and the structures of the eurozone make devaluations an impossibility. The only way out is through austerity -- reducing government spending and increasing taxes sharply. Which, of course, reduces economic growth.
The debt problem is contagious -- that is, it spreads through contact.