The causes of the major financial crisis that surfaced in 2007 are identical to those of virtually all crises that have occurred since the beginning of the 19th century – a credit and debt crisis, a speculative asset bubble (in this case real estate) and a liquidity crisis – but the latest crisis had the particular feature of being significantly accentuated by a new element, namely unbridled securitisation. A phenomenon which at the same time facilitated higher indebtedness and considerably intensified the liquidity crisis. Macroeconomically, it was a crisis of overproduction and overindebtedness caused by poorly regulated globalisation.
The eurozone crisis, which began in 2010, is not simply a consequence of the financial crisis that preceded it. It is essentially the result of having constructed an incomplete monetary zone. Convergence criteria prevented neither a profound divergence in current account balances between the countries of the north and those of the south, nor a growing industrial polarisation. Symetrically, the hopes of subsequent deeper federalism within the zone were dashed.
How can we avoid the pitfalls of illusory federalism and of a return to convergence criteria via policies of internal devaluation which may increase the political and social risk within the eurozone itself, potentially undermining its very existence?