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English Subtitles

0: Really these individual countries are locked into the system and austerity is really the only option they've got until the Eurozone collapses.

0: In the UK we do have some discretion over our policy because we're not locked into the single currency but because of dogma the current regime, the current government, is following the policy of austerity at the moment, although they're failing in terms of generating growth and there're also failing in trying to reach their budgetary targets.

0: We can look at other countries, say The United States.

0: They've been adopting more of an expansionary policy, more of what people call a Keynesian policy to deal with it.

0: And they have had better growth in their economy and had better success in generating jobs.

0: I think Keynesian policies would actually work. There's very little intellectual rigour or sustained empirical evidence to show that austerity works. we've had a number of arguments put forward in the past and they've all been shown to be flawed. really, what we need to do is to get the economy going again.

0: It's unlikely to come from consumers, it's unlikely to come from firms who are unlikely to invest if they cannot sell their products. we've really got to put the government to try and get the economy growing again. The importance of growth is that it improves living standards, it improves the quality of life. it can improve the goods and services we can buy, it can improve the education and health.

0: And the particular problem at the moment is that in terms of austerity, and in terms of economies that are flatlining, is that we're not all in it together.

0: The real people that are suffering from austerity are particularly the unemployed.

0: This is a real problem, particularly in the Eurozone countries and particularly for the young.

0: The young under 25, many of them cannot get jobs.

0: And if they cannot get jobs now they will have real problems getting into the labour market in the future.

0: So it's not just about the dry GDP figures, it's not just about dry economic growth statistics. what's important is that it does affect the quality of people's lives.

0: And particularly the problem now is unemployment in the Eurozone area.

0: The big discussion is about happiness. we need to move away from GDP. of course GDP is a flawed indicator. GDP is a flawed indicator and we should move to this other indicator such as happiness.

0: These happiness indicators are very difficult to calculate and difficult to compare across countries.

0: Certainly we need to look perhaps at new data about the quality of life, about well-being, as well as just GDP. solid-state GDP is the measure we look at, that we statistically look at every month, every quarter, every year, to see where the economy's getting better.

0: It's a imperfect indicator. it doesn't capture all the things about the quality of life.

0: It doesn't capture, particularly, things about the environment and whether we're damaging the environment.

0: So we do need to look at a range of indicators.

0: So GDP is flawed but it's not bad.

9: I think there's still real problems for the euro and I actually think it's likely the euro will collapse.

12: The difficult question is when it will collapse.

22: The Eurozone has real problems because it's locking very different countries into a single currency, a single monetary policy regime and tight fiscal rules.

28: That creates real problems for many of the countries of the Eurozone.

32: The way they really need to get out of their problems is actually to devalue their currency, to have lower exchange rates and to have looser monetary policy.

39: They're really caught in a trap at the moment.

41: Really, for the Eurozone it's got really two options.

46: One: it has an integrated fiscal system where you have a European tax-and-spend system.

50: Not fiscal rules, but fiscal integration as individual countries do.

55: That's very unlikely.

57: If you don't have a fiscally integrated system then the next choice is really you have no single currency

60: and the Eurozone will collapse.

62: I think the Eurozone might stagger on for a few more years but eventually it will collapse.

66: And we've seen this in the past, we've seen historical precedents for this.

70: If we go back to the 1920s we had something called the gold standard.

73: Virtually the whole of the world economy was locked into the gold standard.

76: Basically a fixed exchange-rate regime.

78: Once one country decided to leave, the whole system unravelled, and that country was the United Kingdom in 1931.

85: I think it's very likely the Eurozone will collapse.

87: The very difficult question is knowing when.

90: I actually think if the Eurozone collapses it will be a problem in the short run.

98: It's very difficult to have an orderly withdrawal from the single currency.

100: It will cause financial instability,

103: but in the long run it will be better for Europe and better for Great Britain,

106: because if individual countries have some control over their macroeconomy they can generate economic growth and a stronger Europe will be one which is a growing Europe.

115: And that will be good for Europe and it will be good for the UK because it's one of our major trading partners.

119: Europe's really caught in a bind, particularly the Eurozone's caught in a bind because the Eurozone regime really requires austerity because countries are locked into this single currency and the single monetary policy with much of the policy determined by Germany.

:

Introduction

What will happen to the Euro and the Eurozone in the future?  This video discusses the main problems the Eurozone faces. 

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The full text

0: Really these individual countries are locked into the system and austerity is really the only option they've got until the Eurozone collapses.
0: In the UK we do have some discretion over our policy because we're not locked into the single currency but because of dogma the current regime, the current government, is following the policy of austerity at the moment, although they're failing in terms of generating growth and there're also failing in trying to reach their budgetary targets.
0: We can look at other countries, say The United States.
0: They've been adopting more of an expansionary policy, more of what people call a Keynesian policy to deal with it.
0: And they have had better growth in their economy and had better success in generating jobs.
0: I think Keynesian policies would actually work. There's very little intellectual rigour or sustained empirical evidence to show that austerity works. we've had a number of arguments put forward in the past and they've all been shown to be flawed. really, what we need to do is to get the economy going again.
0: It's unlikely to come from consumers, it's unlikely to come from firms who are unlikely to invest if they cannot sell their products. we've really got to put the government to try and get the economy growing again. The importance of growth is that it improves living standards, it improves the quality of life. it can improve the goods and services we can buy, it can improve the education and health.
0: And the particular problem at the moment is that in terms of austerity, and in terms of economies that are flatlining, is that we're not all in it together.
0: The real people that are suffering from austerity are particularly the unemployed.
0: This is a real problem, particularly in the Eurozone countries and particularly for the young.
0: The young under 25, many of them cannot get jobs.
0: And if they cannot get jobs now they will have real problems getting into the labour market in the future.
0: So it's not just about the dry GDP figures, it's not just about dry economic growth statistics. what's important is that it does affect the quality of people's lives.
0: And particularly the problem now is unemployment in the Eurozone area.
0: The big discussion is about happiness. we need to move away from GDP. of course GDP is a flawed indicator. GDP is a flawed indicator and we should move to this other indicator such as happiness.
0: These happiness indicators are very difficult to calculate and difficult to compare across countries.
0: Certainly we need to look perhaps at new data about the quality of life, about well-being, as well as just GDP. solid-state GDP is the measure we look at, that we statistically look at every month, every quarter, every year, to see where the economy's getting better.
0: It's a imperfect indicator. it doesn't capture all the things about the quality of life.
0: It doesn't capture, particularly, things about the environment and whether we're damaging the environment.
0: So we do need to look at a range of indicators.
0: So GDP is flawed but it's not bad.
9: I think there's still real problems for the euro and I actually think it's likely the euro will collapse.
12: The difficult question is when it will collapse.
22: The Eurozone has real problems because it's locking very different countries into a single currency, a single monetary policy regime and tight fiscal rules.
28: That creates real problems for many of the countries of the Eurozone.
32: The way they really need to get out of their problems is actually to devalue their currency, to have lower exchange rates and to have looser monetary policy.
39: They're really caught in a trap at the moment.
41: Really, for the Eurozone it's got really two options.
46: One: it has an integrated fiscal system where you have a European tax-and-spend system.
50: Not fiscal rules, but fiscal integration as individual countries do.
55: That's very unlikely.
57: If you don't have a fiscally integrated system then the next choice is really you have no single currency
60: and the Eurozone will collapse.
62: I think the Eurozone might stagger on for a few more years but eventually it will collapse.
66: And we've seen this in the past, we've seen historical precedents for this.
70: If we go back to the 1920s we had something called the gold standard.
73: Virtually the whole of the world economy was locked into the gold standard.
76: Basically a fixed exchange-rate regime.
78: Once one country decided to leave, the whole system unravelled, and that country was the United Kingdom in 1931.
85: I think it's very likely the Eurozone will collapse.
87: The very difficult question is knowing when.
90: I actually think if the Eurozone collapses it will be a problem in the short run.
98: It's very difficult to have an orderly withdrawal from the single currency.
100: It will cause financial instability,
103: but in the long run it will be better for Europe and better for Great Britain,
106: because if individual countries have some control over their macroeconomy they can generate economic growth and a stronger Europe will be one which is a growing Europe.
115: And that will be good for Europe and it will be good for the UK because it's one of our major trading partners.
119: Europe's really caught in a bind, particularly the Eurozone's caught in a bind because the Eurozone regime really requires austerity because countries are locked into this single currency and the single monetary policy with much of the policy determined by Germany.
:

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