First published by Verso 2012

      The collection © Verso 2012

      The contributions © The contributors 2012

      ‘This book is a revised version of three reports on the eurozone crisis published online by Research on Money and Finance, namely Eurozone Crisis: Beggar Thyself and Thy Neighbour, March 2010; The Eurozone Between Austerity and Default, September 2010; and Breaking Up? A Route Out of the Eurozone Crisis, November 2011. The first RMF report also appeared as an article in the Journal of Balkan and Near Eastern Studies, vol. 12, issue 4. The authors would like to thank the journal for permission to republish this material.

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      ISBN-13: 978-1-7816-8041-4

      eISBN: 978-1-781-68041-4

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      CONTENTS

       Preface by Costas Lapavitsas

       Acknowledgements

       Introduction: The End of Europeanism by Stathis Kouvelakis

       Glossary

       PART 1 BEGGAR THYSELF AND THY NEIGHBOUR

       1 Several dimensions of a public debt crisis

       A crisis with deep roots

       Institutional bias and malfunction in the eurozone

       Peripheral countries in the shadow of Germany

       The impact of the crisis of 2007–9 and the role of finance

       Policy options for peripheral countries

       The order of analysis in Part 1

       2 Macroeconomic performance: Stagnation in Germany, bubbles in the periphery

       Growth, unemployment and inflation

       Investment and consumption

       Debt

       3 Labour remuneration and productivity: A general squeeze, but more effective in Germany

       A race to the bottom

       The determinants of German competitive success

       Real compensation and the share of labour in output

       4 International transactions: Trade and capital flows in the shadow of Germany

       Current account: Surplus for Germany, deficits for periphery

       Financial account: German FDI and bank lending to the periphery

       5 Rising public sector borrowing: Dealing with failed banks and worsening recession

       The straitjacket on fiscal policy

       Rising public deficits and debt due to the crisis

       6 The financial sector: How to create a global crisis and then benefit from it

       An institutional framework that favours financial but also productive capital

       Banking in the eurozone: The core becomes exposed to the periphery

       ECB operations allow banks to restrict their lending

       Sovereign debt rises

       A hothouse for speculation

       7 Political economy of alternative strategies to deal with the crisis

       Austerity, or imposing the costs on workers in peripheral countries

       Reform of the eurozone: Aiming for a ‘good euro’

       Exit from the eurozone: Radical social and economic change

       PART 2: THE EUROZONE BETWEEN AUSTERITY AND DEFAULT

       8 Introduction

       9 A profusion of debt: If you cannot compete, keep borrowing

       The magnitude of peripheral debt

       The economic roots of external debt

       The composition of peripheral