The difficulties of recovery in the euro zone facing the institutional bonds and German strategy

Abstract

ABSTRACT The article assesses the difficulties of economic recovery in the Eurozone before the events triggered after the Financial Crisis of 2007. A more consistent recovery have proved unworkable in its "periphery", due to restraints imposed by such institutional arrangement as the limits of national debt and public spending and the use of the single currency coupled with the prevailing view of austerity recommended by European leaders - headed by Germany - and that ultimately foster instability and asymmetries in the region. This recipe follows the tradition of German economic policy, which could accumulate significant trade surpluses in the last decade with its mercantilist strategy. However, to be successful requires a permanent and growing demand for its products, which inevitably will be harmed if they do not solve the economic problems in other countries of the Eurozone, and its use is not feasible with positive results for all countries block. It is necessary a change of position of the European authorities and Germany, with relaxation of austerity and the use of fiscal policy to reduce economic imbalances in the region. Otherwise, it is a strong risk that some countries face a balance-sheet recession, with a prolonged period of economic stagnation and widening regional disparities, calling into question the viability of maintaining the block. Key words international economics; Eurozone; economic policy. Artigo recebido em maio 2012.