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The escalation of the greek crisis recently has made me think about the connection between the economic development, austerity and political uncertainty. Unfortunately we don't have a commonly accepted measure of political uncertainty or political instability.
Milton Friedman expresses his sympathy for Syriza supporters and his dislike of the "gnomes in Brussels"
BREAKING NEWS! I have found a comment from Milton Friedman on the present Greek crisis in, which he expresses, his sympathies for Syriza supporters:
Tonight I have been on Bloomberg TV talking to Alix Steel and Joe Weisenthal about Finland and the euro. See my interview here.
There was a time when the Scandinavian countries had a currency union of their own. However, today the Nordic countries have chosen difference monetary regimes. Sweden, Norway and Iceland have floating exchange rates and inflation targeting, while Finland has joined the euro zone and Denmark is pegging the krone to the euro.
In my earlier post The Euro - A Fatal Conceit I argued that had the euro not be introduced and had we instead had freely floating exchange rates then "European taxpayers would (not) have had to pour billions of euros into bailing out Southern European and Eastern European government". Said in another way had we not had the euro then there would not have been a European "debt crisis" or at least it would have been significantly smaller.
Imagine that the euro had never been introduced and we instead had had freely floating European currencies and each country would have been free to choose their own monetary policy and fiscal policy.
A history of political dysfunctionality, corruption, military coups, military conflict with a neighboring country, large current deficits and weak fiscal management.
This week I spoke at Camp Alphaville in London. It was good fun. Among other things I had great fun arguing with my good friend Lorcan Roche Kelly about Greece. As usual Lorcan and I do not agree on anytihing.