Why Europe has bigger problems than the Euro


Is Europe headed for disaster? The answer is both yes and no. For the past six years, the debt-troubled continent has been in the headlines. Its economy is stagnant; deflation has set in; and the illusory dream of a durable monetary union seems to be slipping away as many in some countries remain jobless.

As the European Central Bank decide whether to launch a controversial stimulus program this week, I do not believe that Europe will collapse anytime soon. It has the resources to overcome its present crisis. The continent has relatively strong institutions, an educated population, modern infrastructure, and scores of competitive companies. While policies to reduce government spending and deficits may cause extreme and often unnecessary pain in the short run, European economies will eventually grow again after the deleveraging takes place.

However, by the time the economy is ready to recover, other problems will strike Europe. Prominent…

View original post 558 mots de plus