Tags: Stiglitz | eurozone | Germany | Greece

Stiglitz: Eurozone's Problem Is Germany, Not Greece

By    |   Monday, 26 January 2015 02:13 PM

It's Germany, which demanded an agenda of austerity for the eurozone, that threatens the alliance rather than debt-beleaguered Greece, says Nobel laureate economist Joseph Stiglitz of Columbia University.

The eurozone is aflutter with speculation about what will happen to the group following Sunday's election of Prime Minister Alexis Tsipras in Greece. He has called for an end to austerity and demanded a reduction in Greece's 240 billion-euro debt.

"Greece made a few mistakes, . . . but Europe made even bigger mistakes," Stiglitz told CNBC. "When this crisis began, the debt-to-GDP ratio was 110 percent. Now it's about 170 percent. The medicine they gave was poisonous. It led the debt to go up and the economy to go down."

Given this dynamic, one has to conclude that creation of the euro has had negative consequences, he noted. "While it was an experiment to bring them together, nothing has divided Europe as much as the euro," Stiglitz said.

"The policies that Europe has foisted on Greece just have not worked, and that's true of Spain and other countries."

Experts say Greece's elections may represent only the beginning of political change in Europe.

"If we do not manage to get more growth, the impatience that we see in a number of societies will build up, with political repercussions that we cannot control," Paul De Grauwe, professor of European political economy at the London School of Economics, told The Wall Street Journal.

The eurozone economy grew just 0.6 percent annualized in the third quarter.

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It's Germany, which demanded an agenda of austerity for the eurozone, that threatens the alliance rather than debt-beleaguered Greece, says Nobel laureate economist Joseph Stiglitz of Columbia University.
Stiglitz, eurozone, Germany, Greece
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2015-13-26
Monday, 26 January 2015 02:13 PM
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