Europe's Policies Increasingly Risk Default and Uncompetitiveness
Episode Description
The destruction of middle class wealth in parts of the eurozone under current economic policies has parallels with the pre-World War II era that ushered in economic collapse, followed by extreme politics, says Wharton finance professor Franklin Allen. Debt monetizing policies by the European Central Bank and the Fed may also reduce competitiveness against China, India and other emerging economies.
Brief Summary
Franklin Allen discusses Euro Zone economic policies, historical parallels to pre-WWII Germany, and the risks of current monetary interventions.
Key points
- Destruction of Middle Class Wealth. The current economic policies mirror pre-World War II conditions, risking severe consequences.
- Risk of Default. Countries like Greece may default on their debts, leading to significant economic shifts.
- Inflation Concerns. Current asset prices suggest inflation is already impacting the economy.
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Episode highlights
- Destruction of Middle Class WealthThe current economic policies mirror pre-World War II conditions, risking severe consequences.“The destruction of middle class wealth is alarming.”0:19Sep 14, 2012
- Risk of DefaultCountries like Greece may default on their debts, leading to significant economic shifts.“We may face substantial redistribution from the north to the south.”1:46Sep 14, 2012
- Inflation ConcernsCurrent asset prices suggest inflation is already impacting the economy.“Inflation is a possibility; we already see it in asset prices.”2:15Sep 14, 2012
