Slovakia and the Eurocrisis

Juraj Karpišwww.INESS.sk

karpis@iness.sk

€uro Illusions

€uro-Party

Loans to Households and Nonfinancial Corporations as a

% GDP 1998 vs. 2008

Two Years Later after EFSF, EFSM, IMF, ECB Intervention

Banks are Crucial in Europe

Debt as in WW2

Possible Scenarios high economic growth, EU grows out of debt dramatic increase in taxes, dramatic cuts in

social benefits and pensions – debt repayment

defaults - Nordic €, decomposition of EMU? – New Deutsche Mark? SK in or out? Plan B?

inflation (Quantitative Easing or similar facility of buying bonds for new money produced by ECB, LTROs)

transfer union / fiscal centralization – “fiscal compact”, redistribution of wealth and losses among EU countries, ESM, moral hazard, tragedy of the commons, central planning, slow growth, instability – nationalism, no real “European citizen”

EFSF Guarantees as % of Public Revenues – Burden on Economy in

Convergence Process

www.EuroKriza.sk

Juraj Karpišwww.INESS.sk

karpis@iness.sk