Tuesday 21 November 2017

David McWilliams: Three years on, we are no closer to solving debt crisis

Exactly three years ago this week, this column argued that this financial crisis might result in Ireland (and others) leaving the euro. The argument was not based on any ideological/political antipathy to the currency but on some basic economic analysis about how debt crises and associated recessions end.

Unfortunately, it is very easy to use the "anti-European" slur to dismiss legitimate questioning and, as a result, discussion on this crucial topic has remained largely stifled. But the problem is not going away. The evidence from all over Europe is the opposite -- it has become more acute.

In Ireland, querying the currency is tantamount to treason in establishment circles. These people prefer to replace hard thinking with mantras. One of the mantras is that dissent on the euro is "anti-European". But mantras are no substitute for thinking and we should consider the obvious possibility that the single currency is doing untold damage to the political unity of Europe. Looked at this way, the euro itself is "anti-European". Right now, as the euro bond markets face a massive debt crisis, it is worth revisiting the logic of the single currency argument.

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