Opinion: (George Magnus, senior economic adviser at UBS): “The main problem is that European leaders have misdiagnosed the underlying causes of the crisis, ending up with a flawed agenda and inappropriate policies. They attribute the crisis to fiscal profligacy and the lack of adequate institutional fiscal mechanisms, rather than to the large external and competitiveness imbalances between member states. So, instead of coming up with an economic and debt adjustment strategy that distributes reform responsibilities symmetrically between debtors and creditors, leaders continue single-mindedly to pledge institutionalized fiscal discipline as the solution to the crisis. They have, in effect, sealed a pro-cyclical austerity zone.
“But such ECB actions will only gain traction if political leaders are willing to go beyond their austerity-depression pact to prevent zombie economies.”
My Comment: For the time being, I don’t see the correct diagnosis of the crisis and, consequently, the right means to correct it.