"By dutiful application of bad ideas and wishful thinking, the Europeans have turned a simple sovereign restructuring into a currency crisis, a fiscal crisis, a banking crisis, and now a political crisis. They could have had a lovely currency union without fiscal union. (...)
They could do what George Schulz beautifully called the "simple obvious" things, and return to the kind of strong growth that would let them pay off large debts. Alas, the ECB is full in, both buying debt and lending to banks who buy debt, so now a sharp euro inflation - which is just a more damaging and wider sovereign default -- seems like the most likely outcome. (...)
The guarantee/regulate/bailout regime ends eventually, when the needed bailouts exceed governments' fiscal resources. That's where Europe is now. (...)"
John Cochrane poursuit avec des recommendations excellentes comme l'abolition du statut de banque ("liquidity need no longer coincide with fixed value and first-come first-served guarantees"), et l'émission de perpetuités par les Etats ("Governments can be financed by coupon-only bonds with no principal repayment, thereby eliminating rollover risk and crises.").
Il s'intéresse ensuite aux causes de la croissance molle outre-Atlantique :
"What if this is a disease of tax rates, social programs that pay people not to work, and a "war on business." Perhaps this is the beginning of eurosclerosis. If so, macro tools cannot help. If so, the answer is "Get out of the way." People hate this answer. They want to know "what would you do?" What's the bold new plan? What's the big new idea?"