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Germany has failed to grasp the historical dimension of the European crisis, warn British historian Niall Ferguson and Turkish economist Nouriel Roubini. In an essay published jointly by Der Spiegel and the Financial Times, the two professors, Ferguson teaches at Harvard University and Roubini at the University of New York, recall that in 1933, it was a banking crisis that caused the fall of democratic systems in Europe. They are asking for concrete measures to avoid the collapse of the EU —
The more a disorderly Greek withdrawal from monetary union seems probable, the more the pressure on Spanish banks will increase. This could unleash a bank-run so serious that it could overwhelm the European Central Bank. A major re-nationalisation of the banking system has already begun in Europe. This process could lead the Union toward towards total disintegration.
Ferguson and Roubini see no alternative than to share the responsibility for amortising of the debt through the creation of a temporary fund. They propose direct credits to recapitalise the banks. Especially, Germany should also agree to a higher rate of inflation and abandon austerity policies —
For that, growth must be stimulated in the eurozone and an excessive austerity policy abandoned. The ECB must ease its monetary policy, the euro must weaken and fiscal incentives must be established. We need infrastructure programmes and salary hikes in key countries to stimulate consumption.
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