Sunday’s newspaper comments by Nobel Laureate economist Joseph Stiglitz are not anything to be taken lightly. He believes that Europe is possibly on the brink of a new recession and the future of the euro is in doubt. He commented on concerns he has for Europe and America as well, saying: “The worry is that there is a wave of austerity building throughout Europe and even hitting America’s shores.” These were the comments from his book, “Freefall”, published in the Sunday Telegraph.
He commented further on the events happening globally, saying: “As so many countries cut back on spending prematurely, global aggregate demand will be lowered and growth will slow even perhaps leading to a double-dip recession.
“America may have caused the global recession but Europe is now responding in kind.”
He also believes the euro needs a major overhaul. Without it, the 16 member states should consider giving up on the currency. He called the euro “an experiment that may now be faltering.”
Stiglitz commented further on the euro, saying: “It is perhaps better to admit failure and move on than to extract a high price in unemployment and human suffering.”
He has major concerns about the ability of Spain to come back from deep spending cuts currently taking place. The possibility of a slowdown in the economy there is great.
He commented on the fate of Spain, saying: “Spain may be entering the kind of death spiral that affected Argentina just a decade ago.”
Stiglitz believes the euro could survive if there was more institutional support. He also argued the single currency could be saved if Germany exited or the euro zone was split into sub-regions.