[...]... economy has been in free fall In 201 1, 201 2, and 2013 the Greek economy contracted by 7.1 %, 6.4 %, and 4.0% respectively Italy, Portugal and France are shaking in their boots Many euro countries are in recession, and some even in depression In 201 1, the Eurozone’s GDP, excluding Germany, the Netherlands and Austria, rose by a meagre 1.0 %, to contract by 0.8% in 2012 and by 0.5% in 2013 Even France is... Greece, Spain, and other now-troubled countries because they are part of the Eurozone If those countries now cannot pay back their debts, other Eurozone members must stand in for them Europe is large and strong enough to solve its own problems Europe’s strong economies must shoulder their responsibility It is unfair of them to try to shirk their duty However, the investors overlooked the rules of the. .. None of these countries currently borrows at market conditions They all live on funds provided or guaranteed by other Eurozone countries, which mitigate, with their taxpayers’ money, the austerity demanded by markets The crisis rumbles on and is far from being resolved It’s all a far cry from the Lisbon Agenda’s wish-list Something has definitely gone wrong in Europe The Euro and Peace The euro was... international coalition against the euro In Greece the socialist party Syriza, led by Alexis Tsipras, now the party with the strongest support in Greece, has declared that it will no longer obey any of the austerity measures imposed by the Troika, made up of the International Monetary Fund (IMF ), the ECB, and the European Union (EU) Should it come to power, its stance might result in Greece exiting the euro. .. while the EU, with barely 17 %, exhibited the weakest growth among the large regions, a bit lower than the US, and that only thanks to the fact that the rapidly growing eastern European countries were included, which had a lot of catching up to do Taken by itself, eastern Europe, including the formerly Communist countries in central Europe, clocked up a remarkable 45% The current members of the Eurozone,... peoples and has resurrected many old ghosts that had long since been presumed dead and buried As great as the beneficial effect of the European Union is, just as destructive has been the impact of the common currency on the cohesion of Europe Twenty years ago Europe was brimming with euro enthusiasts, and I was one of them, unable to understand, or unwilling to hear, the warning voices of older and more... Piraeus, Theodorus Katsanevas, founded the party Drachme Five Stars on a similar platform, trying to imitate the success of Italy’s Beppe Grillo, whose anti -euro and antiestablishment party, Five Stars, came third in the 2013 election, garnering a quarter of the votes The French National Front, led by Marine Le Pen, and the Dutch Freedom Party, led by Geert Wilders, both of which are leading the polls,... (December 201 3, %) INTRODUCTION The Euro Crisis The European Union has freed Europeans from the yoke of nationalism and greatly contributed to freedom and prosperity in the continent Its stability lies in the voluntary, mutually advantageous cohesion of its peoples This stability, however, is being threatened by the euro crisis, which has given rise to a great deal of contention and resentment between these... Treaty After all, one of the pillars of this treaty is the no-bailout clause (article 125 of the Treaty on the Functioning of the European Union ), which states that no Eurozone member state shall be liable for, or assume the commitments of, another member state:25 The Union shall not be liable for or assume the commitments of central governments, regional, local or other public authorities, other bodies... renegotiate the Maastricht Treaty As the pictures above show, the tensions have a strong international dimension, as austerity fatigue and rescue fatigue clash ever more often The governments of the South rail against the constraints that the Troika imposes on them Germany in particular has become the target of demonstrations The governments of the South attack Germany, the main provider of the rescue funds, . Director of the Institute for International Economy, University of Bonn ‘ The Euro Trap is a brave and brilliant analysis of the quagmire that the Eurozone has fallen into. Hans-Werner Sinn s lucid. to the Eurozone debate, and a must-read for everyone who wishes to participate in it.’ Harald Uhlig, Professor in Economics, University of Chicago THE EURO TRAP THE EURO TRAP ON BURSTING BUBBLES. without such guarantees ever having to be honoured. I call this the money-in -the- display-window theory. According to this theory, the money needs only lie in