Samuelson: Europe’s economic purgatory

WASHINGTON POST, 12/14/2011 by Robert J. Samuelson (Hat tip: John H. Detweiler)

By now, it’s obvious that adopting the euro was a colossal blunder. It may rank as Europe’s worst policy mistake since World War II. The virtues of the common currency — it reduced transaction costs and the uncertainty of fluctuating exchange rates among national monies — were temporary. Its vices seem permanent or, at least, semi-permanent: the mounting economic costs of saving the euro; the growing nationalism from arguing over who’s to blame. ✧ Do not expect some magical “solution.” Europe has entered an economic and political purgatory from which there is no early escape. On paper, the crisis countries (so far: Greece, Portugal, Ireland, Italy and Spain) might benefit from abandoning the euro and resurrecting national currencies. They could then devalue these currencies, spurring exports and tourism. But in practice, this choice is dangerous and maybe impossible. Read more at the Washington Post...