Eurozone Dystopia

Eurozone Dystopia

Groupthink and Denial on a Grand Scale

William Mitchell

Eurozone Dystopia traces the origin of the Eurozone and shows how the historical Franco-German rivalry combined with the growing dominance of neo-liberal economic thinking to create a monetary system that was deeply flawed and destined to fail. It argues that the political class in Europe is trapped in a destructive groupthink which prevents it from seeing their own policy failures. Millions are unemployed as a result and the member states are caught in a cycle of persistent stagnation and rising social instability.

Chapter 12: The convergence farce: smokescreens and denial

William Mitchell

Subjects: economics and finance, political economy, post-keynesian economics, politics and public policy, european politics and policy, political economy


The convergence criteria specified under Article 109j(1) (Maastricht Treaty, 1992) relating to inflation, interest rates and exchange rate stability were clear and most of the contending nations were likely to have satisfied them as the deadline approached. The sticking point, however, was the rules under Article 104c and Protocol 5, which related to ‘excessive deficits’. The excessive deficit criterion, outlined earlier, was clearly tripping a number of nations up, including Germany. In 1997, France, Germany and Spain had deficits above 3 per cent and could not really appeal to the special circumstances clauses as a way out. Further, the public debt ratios in Germany and Spain were above the 60 per cent threshold and had been increasing since 1995. By contrast, although Italy’s public debt ratio was well in excess of the criteria, it had been falling. Further, Belgium was in a similar situation to Italy. Tactically, Germany could not isolate Italy without pleading some special case for Belgium, which of course it attempted without success.

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