What really happen to Europe?

If you want to really understand what’s going on with Europe’s economy and its currency and fiscal crises, you have to talk to a guy named Daniel Gros. Daniel Gros is a German-born economist based at the Centre for European Policy Studies, a think tank in Brussels — and the occasional victim of mistaken identity.

Gros suggests that Americans who rely on the Financial Times or Wall Street Journal to track the trajectory of the ongoing European crisis are missing the point.

As Gros says, “You really need to read the German and French press,” Why? From the role of the European Central Bank to the root cause of the crisis, “the things and assumptions that are taken for granted in the Financial Times are the opposite of what is taken for granted in Germany.” German policymakers regard fiscal profligacy — too much public debt — as the root cause of the crisis in Europe, and take it as a given that simply solving the fiscal problem solves the whole problem. German policymakers also believe that the European Central Bank is solely responsible for looking after the banking system — and not the euro zone economy at large. So asking the European Central Bank or a European country to directly bail out Greece or Spain would be like asking the Federal Reserve to bail out the state of California.

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