The New York Times Editorial “Europe Is Poised to Repeat Mistakes” of April 9, 2020 Misses Three Crucial Problems: The Euro, Austerity, and the #StayAtHome Lockdown

The European Union’s big economic problems, exacerbated by its seriously flawed response to the coronavirus crisis, are not due, as The Times writes in its April 9 editorial, to a lack of coordination between the member governments, or to a lack of a fiscal union, or to a failure to agree on a “coronavirus bond” to help the nations most in economic difficulty. Rather, the EU’s economic crisis is due to three policy blunders of massive proportions: 1) an austerity policy imposed in the Eurozone since the 2009–2010 financial crisis, reprising the blunder made by the United States in the 1930’s which turned a recession into the Great Depression; 2) the seriously problematic euro, the common currency of many of its nation members; 3) the economically destructive #StayAtHome policy to deal with the coronavirus crisis instead of a policy mandating masks in public which would save the economy while preventing the spread of the virus.

Prior to the euro’s adoption in 2000, each current Eurozone member nation had its own currency and sovereign central bank capable of engaging in QE whenever necessary. Each EU member had its own sovereign economic policy, and hewed to EU guidelines on national debt and budget deficit limits on a voluntary basis. Prior to the euro, no EU nation adopted an austerity policy in times of recession, since such a policy was universally considered economic madness. Everything changed with the adoption of a common currency, the euro, necessarily. No Eurozone nation could dispense with debt guidelines, otherwise the common currency would tend to depreciate, to the detriment of the nations adhering to the guidelines. When the Eurozone policy makers decided to adopt a policy of economic austerity to enforce the debt guidelines, it was imposed on all the Eurozone nations. It mattered little to the policy makers that austerity was an extremely counterproductive policy, inevitably leading to a severe depression in Greece, Italy, Spain, Portugal, and France, the economically weak members with excessive debt.

Unfortunately, Eurozone economic policy makers still do not understand the causes of the European Union’s ten-year economic crisis prior to the coronavirus crisis, namely the euro combined with an absurd economic austerity policy. Without the euro, no economic austerity policy could be imposed on member nations. No EU member with its own national currency would have adopted an economically suicidal austerity policy. Without the euro, each nation would have its own currency with an exchange rate compatible with its economy. Without the euro, each nation would have its own sovereign central bank capable of doing QE whenever necessary to avoid a deep recession and high unemployment, just as the United States has done since the 2008–2009 financial crisis. Without the euro, each nation would be free of any debt and budget deficit constraints, just like the United States. (Where would the U.S. be without QE, which financed the entire budget deficit between 2010 and 2013?)

The disastrous adoption of the euro along with an economic austerity policy has been compounded by the absurd adoption of a #StayAtHome policy which has quickly devastated the EU’s economy. Instead of choosing #StayAtHome to counter the coronavirus, the EU should have adopted a policy which mandates wearing masks in public. Mandatory masks in public not only would immediately block the spread of the coronavirus, it would not interfere with normal economic activity. (Just because masks in IC hospital units are not 100% effective does not mean they are not 100% effective in public, where the viral loads are necessarily very light (people severely ill with the coronavirus are bedridden) as opposed to the very heavy viral loads in coronavirus hospital wards and the occasional aerosolizing of the virus during certain procedures.)

It is an amazing deficiency of logic by the leaders of the European Union 1) to have adopted the euro; 2) to have adopted an economic austerity policy over the past ten years; and 3) to have adopted a #StayAtHome policy instead of mandatory masks in public. They fail to compare the disastrous economic record of the euro with the fantastic economic record of the national currencies from the end of WWII up to 2000, the year the euro was adopted. They fail to have learned the lesson of the United States in the 1930’s when an economic austerity policy turned a recession into the Great Depression. And they fail to use logic when they choose #StayAtHome, an economically suicidal policy to counter the coronavirus crisis, when they simple alternative of mandatory mask in public would prevent the spread of the virus immediately while saving the economy.

The performance of the EU leadership has been so bad since the year 2000, and especially since 2010, that it’s hard to believe that the EU leadership has not been infiltrated with foreign agents wanting the destruction of the European Union. The solution for quickly solving the EU’s economic, social, and political problems is 1) abandoning the euro and returning to the former national currencies; 2) abandoning its absurd economic austerity policy; and 3) abandoning #StayAtHome in favor of mandatory masks in public. The citizens of the European Union had better wake up and realize all this before it’s too late.

© Edward Sonnino 2020

April 13, 2020

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Edward Sonnino

Born and raised in New York City. Best course in college: history of art. Profession: economic forecaster and portfolio manager. Fluent in French and Italian.