Europe’s Economic Suicide

By PAUL KRUGMAN

On Saturday The Times reported on an apparently growing phenomenon in Europe: “suicide by economic crisis,” people taking their own lives in despair over unemployment and business failure. It was a heartbreaking story. But I’m sure I wasn’t the only reader, especially among economists, wondering if the larger story isn’t so much about individuals as about the apparent determination of European leaders to commit economic suicide for the Continent as a whole.

Just a few months ago I was feeling some hope about Europe. You may recall that late last fall Europe appeared to be on the verge of financial meltdown; but the European Central Bank, Europe’s counterpart to the Fed, came to the Continent’s rescue. It offered Europe’s banks open-ended credit lines as long as they put up the bonds of European governments as collateral; this directly supported the banks and indirectly supported the governments, and put an end to the panic.

The question then was whether this brave and effective action would be the start of a broader rethink, whether European leaders would use the breathing space the bank had created to reconsider the policies that brought matters to a head in the first place.

But they didn’t. Instead, they doubled down on their failed policies and ideas. And it’s getting harder and harder to believe that anything will get them to change course.

Consider the state of affairs in Spain, which is now the epicenter of the crisis. Never mind talk of recession; Spain is in full-on depression, with the overall unemployment rate at 23.6 percent, comparable to America at the depths of the Great Depression, and the youth unemployment rate over 50 percent. This can’t go on — and the realization that it can’t go on is what is sending Spanish borrowing costs ever higher.

In a way, it doesn’t really matter how Spain got to this point — but for what it’s worth, the Spanish story bears no resemblance to the morality tales so popular among European officials, especially in Germany. Spain wasn’t fiscally profligate — on the eve of the crisis it had low debt and a budget surplus. Unfortunately, it also had an enormous housing bubble, a bubble made possible in large part by huge loans from German banks to their Spanish counterparts. When the bubble burst, the Spanish economy was left high and dry; Spain’s fiscal problems are a consequence of its depression, not its cause.

Nonetheless, the prescription coming from Berlin and Frankfurt is, you guessed it, even more fiscal austerity.

This is, not to mince words, just insane. Europe has had several years of experience with harsh austerity programs, and the results are exactly what students of history told you would happen: such programs push depressed economies even deeper into depression. And because investors look at the state of a nation’s economy when assessing its ability to repay debt, austerity programs haven’t even worked as a way to reduce borrowing costs.

What is the alternative? Well, in the 1930s — an era that modern Europe is starting to replicate in ever more faithful detail — the essential condition for recovery was exit from the gold standard. The equivalent move now would be exit from the euro, and restoration of national currencies. You may say that this is inconceivable, and it would indeed be a hugely disruptive event both economically and politically. But continuing on the present course, imposing ever-harsher austerity on countries that are already suffering Depression-era unemployment, is what’s truly inconceivable.

So if European leaders really wanted to save the euro they would be looking for an alternative course. And the shape of such an alternative is actually fairly clear. The Continent needs more expansionary monetary policies, in the form of a willingness — an announced willingness — on the part of the European Central Bank to accept somewhat higher inflation; it needs more expansionary fiscal policies, in the form of budgets in Germany that offset austerity in Spain and other troubled nations around the Continent’s periphery, rather than reinforcing it. Even with such policies, the peripheral nations would face years of hard times. But at least there would be some hope of recovery.

What we’re actually seeing, however, is complete inflexibility. In March, European leaders signed a fiscal pact that in effect locks in fiscal austerity as the response to any and all problems. Meanwhile, key officials at the central bank are making a point of emphasizing the bank’s willingness to raise rates at the slightest hint of higher inflation.

So it’s hard to avoid a sense of despair. Rather than admit that they’ve been wrong, European leaders seem determined to drive their economy — and their society — off a cliff. And the whole world will pay the price.

歐洲 走向經濟自殺末路

泰晤士報上周六報導有一種愈來愈嚴重的現象：「經濟危機造成自殺」，因為失業和生意失敗讓人絕望而結束自己的生命。這是令人心碎的報導，但更嚴重的問題不在個人的自殺，而在歐洲領導人顯然已決心帶領整個歐陸步向經濟自殺。我相信我不是唯一這麼認為的人，尤其是在經濟學家間。

幾個月前我還覺得歐洲有一線希望。你可以回想去年秋末歐洲似乎瀕臨金融崩潰；幸好歐洲央行（ECB）出手救援，提供歐洲銀行業者無限量的信用，只要它們以歐洲政府債券當作擔保；此舉直接支援歐洲的銀行，並間接支援政府，因而化解了市場的恐慌。

當時的問題是，這個勇敢而有效的行動會不會是某種更大反思的開始，歐洲領導人是否將善用ECB創造的喘息空間，重新思考造成今日這個地步的政策。

但歐洲領導人非但沒有重作思考，反而加倍押注他們錯誤的政策和思維。而現在已經讓人很難相信有任何方法可以改變方向了。

想想現在已是危機震央的西班牙。西國現在不只是衰退，而是全面蕭條，總失業率達到23.6%，相當於美國在大蕭條谷底時的水準，西國年輕人的失業率甚至超過50%。這不能繼續下去 — 市場已意識到這一點，而這是西班牙借貸成本再度走高的原因。

就某方面看，西國如何變成今日的情況並不重要 — 重要的是值得嗎？西班牙的情況與歐洲（特別是德國）官員喜歡掛在嘴邊的道德故事沒有相似之處。西班牙並未揮霍財政資源 — 在危機前夕，西國債務低，而且有預算盈餘。不幸的是，西國也有巨大的房市泡沫，部分原因是由德國銀行大量放款給西國銀行所造成。當泡沫破滅，西班牙經濟陷於四面楚歌；西國的財政問題是蕭條的結果，不是原因。

儘管如此，不難想見的是，柏林和法蘭克福的處方是更嚴厲的撙節措施。

坦白說，這簡直是瘋狂。歐洲曾經歷過幾年的嚴厲撙節計畫，其結果正是歷史系學生可以告訴你會發生的事：這類計畫會把困頓的經濟體推向更深的蕭條。而因為投資人在評估一國償債能力時就是看經濟表現，所以撙節措施完全無助於降低借貸成本。

有什麼替代選項？在1930年代 — 一個現代歐洲連許多細節都在重演的時代 — 復甦的必要條件是退出金本位制。同樣的，現在必要的行動是退出歐元，並恢復國家貨幣。你可能說這是無法想像的事，而這確實是經濟和政治上極具破壞力的事，但如果繼續走今日的路，對那些失業率已達蕭條時代水準的國家施加更嚴厲的撙節措施，才是真的無法想像。

如果歐洲領導人真想挽救歐元，就必須尋找不同的道路。而這個替代選項的輪廓實際上相當清楚。歐陸需要更擴張的貨幣政策，其作法是ECB必須明白宣示願意接受較高的通貨膨脹；ECB也需要更擴張的財政政策，其作法是德國擴增預算，以彌補西班牙和其他困頓歐陸周邊國家的撙節，而非強化它。即使採取這些政策，周邊國家仍得面對幾年的艱苦日子，但至少會有一些復甦希望。

不過，我們實際上看到的是完全缺乏彈性。歐洲領導人3月簽署的財政協議，等於把財政撙節當作任何問題的唯一對策。另方面，ECB主要官員已明白表示，只要出現任何通膨升高跡象就願意提高利率。

所以要想不感到絕望也難。歐洲領導人非但不承認犯錯，反而決心把他們的經濟 — 和社會 — 推落懸崖。而全世界將為此付出代價。

原文參照：
http://www.nytimes.com/2012/04/16/opinion/krugman-europes-economic-suicide.html

2012-04-17/經濟日報/A5版/國際焦點 編譯吳國卿