Tuesday, August 14, 2018

All the Cool Kids Are Reading Ashoka Mody's EuroTragedy: A Drama in Nine Acts!

That's right. Don't miss out. As Arthur Goldhammer has noted, Mody's book is "the best single book not only on the euro crisis but on the euro project tout court". I agree! If you want to really, really understand how the Eurozone came to be and how it went awry, this is the book for you.
To further whet your appetite, here's is a snippet from Christopher Caldwell's excellent review of the book in The Weekly Standard (yes, The Weekly Standard--don't be close-minded!).
"There is a profound mystery about the euro, according to the Princeton economist Ashoka Mody. “Why,” he asks in EuroTragedy: A Drama in Nine Acts, his authoritative new history of the currency, “did Europeans attempt such a venture that carried no obvious benefits but came with huge risks?” There is an answer to this: Often what economists call risks politicians see as opportunities.
Germany has been the main actor in this story since the euro was conceived a half-century ago. Back then, the country’s neighbors, above all France, resented the strong German currency, the deutsche mark, and the devaluations into which Germany’s more productive and disciplined economy so often forced them. But Germany, too, had an interest in unifying Europe economically. The resolution of the Second World War had deprived it of many of the attributes of national sovereignty—and this gave it an interest in weakening the sovereignty of its neighbors. It’s funny: “European unity” was a project that advanced because a lot of parochial politicians hoped to pull a fast one on their rivals in other countries.
Mody parts ways with David Marsh’s 2009 book The Euro, which up till now has been the standard reference. Marsh, a British journalist who for many years covered Germany’s Bundesbank, defends the euro and the Germans. He paints the early political champions of the common currency, German chancellor Helmut Schmidt and French president Valéry Giscard d’Estaing, as macroeconomic sophisticates who bequeathed a seaworthy vessel to their less money-minded successors, Helmut Kohl and François Mitterrand. In particular, Schmidt was attuned to the threat of American macroeconomic irresponsibility, recalling how Lyndon Johnson’s attempts to simultaneously build out a welfare state and rescue Vietnam inflicted inflation on European economies. In Marsh’s telling, the euro was almost an act of transatlantic self-defense.
For Mody, who represented the IMF in its program to rescue the Irish financial system a decade ago, the euro was an “economic absurdity” from the start. Germany is the villain, although of a strange kind—the villain of something it had to be dragged kicking and screaming into doing. Words in a German’s mouth mean different things than they do in the mouths of others. When most Europeans talk of “banking union,” they mean the Europe-wide pooling of liability in order to lower risk. When a German says “banking union,” he means having German accountants lay down the law to banks in Greece. “We as Germans do not want to pay into a big pot,” says Germany’s former finance minister Peer Steinbrück, as if it were an aesthetic matter."
Great stuff. Read the whole review. And then get the book!
About this article
WEEKLYSTANDARD.COM
Christopher Caldwell on the euro and the damage it wrought.

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