News Report (from Spiegel Online): This year’s winner of the Nobel Prize for Economics, Paul Krugman, has joined the chorus of those criticizing German government inaction in the face of the financial crisis. He spoke to SPIEGEL about the price of doing nothing and why he thinks Berlin has misjudged the severity of the slump.
Krugman: “Europe has a major coordination problem: The trade-off between deficits and output is much less favorable for any country acting unilaterally than for the EU as a whole. So cooperation is essential. But if Germany, the largest economy, refuses to go along, there will be no cooperation. Events have given Germany a strategic policy importance disproportionate to its size.
SPIEGEL: What’s the price of inaction?
Krugman: A very, very severe slump, with worse unemployment than at any time since the 1930s — and quite possibly a Japanese-type lost decade to follow.
My Comment: The European Union must make a fateful decision. If the EU countries takes the path of unification, they will become the world’s largest economy, as well as the cultural center of the world. On the other hand, if every separate country tries to solve the problems on its own, this will bring them all to a collapse so great that none of them will ever recover from it! It’s because this will set them against the law of Nature, which is driving all humanity toward globalization.