Publication

It is now becoming increasingly clear that generalized austerity in the eurozone will not pacify the financial markets. As a result, the austerity strategy should be changed quickly – 1) the European Commission should forthrightly declare that since the eurozone is quickly moving into recession, the austerity programs should be softened and spread over a longer period of time, and 2) the ECB should take up its role of lender of last resort in the government bond markets of illiquid but solvent member countries of the eurozone.