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The non-origins of the euro crisis

It seems that something has changed lately in the economy of the eurozone. No, I don’t mean that we now “see the end of the tunnel” as the political leadership of the eurozone would like us to believe. Besides, even if we were at the end of the tunnel that wouldn’t mean much if we were speeding on the highway of disaster, would it?

What I think we do see is an end of the downfall, reaching the bottom of a swamp, or an equilibrium of misery, rather than the end of a tunnel. It might be that this is the end of the first phase of a crisis, giving its place to a second one of “stubborn” (as it is going to be called) stagnation, a period during which the shortcomings of the euro will become progressively more conspicuous than before. In the forthcoming posts I will present my arguments for why this currency remains a bad deal, especially for countries like my own, in a more structured way. But first things first.

To make my case clear, I need first to go back to the very beginnnings of the crisis. In previous posts I tried to explain why the crisis occurred, but I have not put a comparable amount of effort to do the opposite, namely to explain why the most commonly referred causes of the crisis are nothing more than a bunch of baloney.

Let’s remember what analysts and journalists have often proposed as causes of the euro crisis:

-Government overspending

-High indebtedness, public or private

-Low competitiveness

-Lack of fiscal oversight by a central authority

-Improper inflation management by member states

-Tax evasion and corruption

-Fake statistics

-Unsustainable business models

-Cultural traits, and others.

A close inspection of the reasons stated above should reveal those that are simply fallacious; others are factually wrong and others irrelevant; and some reasons, regardless of their validity, can tell nothing really about why the crisis occurred.

The reason for this is that “common sense” explanations like the ones above cannot be applied in uncommon circumstances. It is an error that people often make when trying to explain the euro crisis that they constrain themselves to a causal analysis, neglecting to identify the conditions that permitted these causal relations to exist in the first place, in our case the common currency. This change in conditions can be much more revealing than these simplistic explanations which the hordes of journalists have for so long kept reproducing.

But this search for causality has also been encouraged for another reason: causality reveals accountability. And somehow when accountability rests with the others, then causality seems more plausible. I am referring of course to the directors of the euro disaster, the Clique of politicians and bankers that could take comfort in assigning the blame to the users of the system that they created and keep operating virtually unchanged, despite the turmoil and despite the overwhelming evidence for the need for structural changes.

So this post serves as an intro to a number of subsequent, non-consecutive posts in which I am going to try to bust the validity of these causes of the euro crisis, while emphasizing on the conditions that the euro created making such a crisis possible and thus, the search for causality a trivial exercise of retrospective determinism. The timing may not be optimal but perhaps now that the media interest in the euro crisis has waned and the brainwashing has stopped, some blog readers might be more appreciative of a sober perspective on the origins of the euro crisis and more receptive to alternative narratives.

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