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Europe's OrphanThe Future of the Euro and the Politics of Debt$
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Martin Sandbu

Print publication date: 2017

Print ISBN-13: 9780691175942

Published to Princeton Scholarship Online: May 2018

DOI: 10.23943/princeton/9780691175942.001.0001

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Europe Digs Deeper

Europe Digs Deeper

(p.106) Five Europe Digs Deeper
Europe's Orphan

Martin Sandbu

Princeton University Press

This chapter explains how the intellectual principles behind the eurozone's approach to Greece and Ireland were generalised to guide policy in 2010–11 towards larger countries and to the currency union as a whole. Rather than admitting mistakes, leaders came to deem the medicine prescribed for Athens, Dublin and Lisbon suitable for the rest of the eurozone too. So long as they held on to their original diagnosis, they could not recognise that the precedents set in the smaller countries were perpetuating the crisis. The result was a disaster: a self-inflicted second recession, a poisoned politics, and a gratuitous existential threat to the euro itself. By letting the same errors govern policy towards the eurozone's bigger members, its leaders turned what had been a grave crisis into an existential one. The costs of these mistakes are still being paid in ongoing economic suffering, political ill will, and uncertainty.

Keywords:   eurozone, Greece, Ireland, currency union, recession, euro, policy, economic suffering, political ill will, uncertainty

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