Wednesday, 6 March 2013

Paul Krugman on the "cockroaches" in charge of the failed euro

Commissioner Olli Rehn - one of the minor European "cockroaches"

I do not often find myself agreeing with Paul Krugman, but what he has to say about European "cockroaches", like EU commissioner for Monetary and Financial Affairs and the Euro, Olli Rehn, is spot on.

I’ve written several times about cockroach ideas in economics — ideas that you try to flush away, but keep coming back. (Are cockroach ideas the same as zombie ideas? Not quite, I would say; I think of cockroach ideas as misconceptions held because the people holding them are just unaware of basic facts, while zombie ideas are held by people who refuse to acknowledge contrary evidence).
The amazing thing is the way men who know neither theory nor the history of previous crises are utterly convinced that they know what to do in our current crisis; and how their confidence in their prescriptions has been unaffected by the fact that they have been wrong about everything so far. Of course, what’s even more amazing is the fact that these men are actually running things.

Rehn is unfortunately only a minor representative of the breed. The main "cockroaches" are the current political leaders of the European Union and their predecessors, who are responsible for introducing and upholding a failed currency union. 

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