crisis conditions

Stabilizing the Euro

  • Why it matters

    Why it matters

    Though Donald Trump still dominates headlines, economists remain concerned that Europe has work to do at home on the euro crisis before they can worry about the 45th president of the United States.

  • Facts


    • Lupus alpha is an independent investment company that was founded in Germany in 2000.
    • Clemens Fuest is president of the Ifo Institute for Economic Research.
    • Tomáš Sedláček is the chief macroeconomic strategist at ČSOB in the Czech Republic.
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Two economists, three opinions? Just the one. Clemens Fuest and Tomáš Sedláček agree what southern Europe needs to do is save. Source: DPA, PR [M]

Though concerns about the new U.S. President-elect Donald Trump are dominating the news, Europe still has another pressing problem: the euro.

The euro crisis isn’t over yet, nor will it be until southern Europeans reduce debt, say economists Clemens Fuest and Tomáš Sedláček. They talked with Handelsblatt about how to deal with nations in debt at a meeting of Lupus alpha, the investment management firm based in Frankfurt. Like the old adage ask two economists for an opinion and you’ll get three, they had differing suggestions for how to go beyond that, in a wide-ranging discussion about economic policy.

With growth slowed in southern Europe, Mr. Sedláček, an award-winning writer and chief economist at the Czech ČSOB bank, said it makes little sense to impose penalties on countries that then will have to pay these back with further debts.

“The problem, though, is that in the euro zone we have mutualized our monetary policy but not our fiscal policy,” he said. “I believe that governments should also not be responsible for fiscal policy if they can’t print money. Only tax policy should remain in their hands.”

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