Euro Bias

Confidence tricks for the euro zone | Hugo Dixon.

When a pundit has Euro Bias, he is being optimistic, not realistic, and this mindset colors his analysis. Look at the first line of the article:

The euro crisis is to a great extent a confidence crisis. Sure, there are big underlying problems such as excessive debt and lack of competitiveness in the peripheral economies. But these can be addressed and, to some extent, this is happening already.

He dismisses the debt and competitiveness issues summarily and believes that we can trick the markets by boosting confidence. This will not work because he ignores the fact that the debt and competitiveness issues are the issues that are destroying confidence. The only way Europe will find its way back to growth is by allowing the periphery to default on accumulated debt and to return to a devalued national currency to restore competitiveness. Therefore, eliminate the debt and the strong currency creating the competition issues, and you have a way out.

If you believe that the European problem is solvable without dissolving the Euro, then you too suffer from Euro Bias.


One thought on “Euro Bias

  1. Yeah, anyone who doesn’t agree with your points or with your forecasts of European desintegration has Euro Bias. Or as you said in that other article, anyone who disagree with you is being “optimistic” and therefore “unreal” while the likes of you are the realistic ones.

    Are you from the tea party or something? Looks like so.

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