L’alliance entre banques et gouvernements au cœur de la crise de la zone euro

Infographie : François Descheemaekere

'Alliance between banks and governments at the heart of eurozone crisis'

[Deutsche Welle]

Edmund S. Phelps is the 2006 winner of the Nobel Prize for Economics. Phelps is McVickar Professor of Political Economy at Columbia University in New York and Director of Columbia's Center on Capitalism and Society.  

The 'monstrous irresponsibility' of European banks contributed to the current euro crisis, says Edmund Phelps. But at its core lies a fatal collusion between governments and banks, argues the Nobel Winner in Economics.

Deutsche Welle: There has been criticism of last week's EU summit that it didn't address the immediate crisis enough. And that under the leadership of German Chancellor Merkel European leaders didn't allow the European Central Bank to act as a lender of last resort, didn't implement eurobonds or grant a banking license for the stability mechanism. Many say that the crisis can be only be solved by implementing some or all of those measures. Do you agree?
Edmund Phelps: I guess I was a little surprised that there wasn't more attention paid to the immediate crisis. But the explanation I suppose is that the leaders had not yet reached an adequate agreement as to how to proceed with the immediate crisis. And we are still wondering whether the European Central Bank (ECB) is going to be empowered to buy up a whole boatload of Greek debt and I suppose the willingness of the ECB to do so is another element in the equation.
I think there is still some uncertainty about how much money the IMF would be able to bring to this task. It may take a month or even several months before a full agreement is reached how to deal with the Greek problem. Of course the problem is that meanwhile the clock is ticking and Italy is exposed to a speculative attack on Italian bonds. So Europe is in very dangerous territory at the present time.
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