Lies and Truth About the Financial Crisis in the Eurozone

Alain Parguez

International Journal of Political Economy, 2010, vol. 39, issue 4, 31-55

Abstract: By integrating Richard Koo's general theory of balance sheets and the general monetary circuit approach through a genuine stock flow analysis, I prove that the two financial crises in the eurozone, the banking and the currency crises, were caused by disastrous policy choices of governments imposing shock therapy policies for at least forty years. Banks played a passive role in striving to save their net worth. They also had to react to a private capitalist system more and more tempted to play a purely predatory/parasitical role. Finally, the absurd structure of the eurozone worsened an otherwise disastrous situation. Europe is doomed to an increase in public debt and is heading toward long-term instability. Salvation is possible, but not within the straitjacket of the eurosystem aimed at the dismantling of the state.

Date: 2010
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DOI: 10.2753/IJP0891-1916390402

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