Marti Sandbu: EuroTragedy: A Drama in Nine Acts, by Ashoka Mody: "Writing about the euro... doing justice to the technicalities threatens to kill any narrative, while simplified storytelling risks misguided analysis. Ashoka Mody’s... is an ambitious attempt to avoid this trap...
....The sweeping chronology of the euro is well told. With evident passion.... He has such a good eye for what is economically important that his observations trump much of the conventional analysis he echoes. He shows that the roots of European economic underperformance and political disquiet have little to do with the fact of monetary union itself.... He highlights governance failures such as corruption and the extreme unwillingness of European governments to clean up and restructure their banking systems....
Mody is on surer ground when he slams policymakers for inappropriate macroeconomic policy choices: excessive fiscal tightening and insufficiently loose monetary policy. And he nails the biggest policy error of them all: the insistence that euro member states could not default on their own debt, or allow their banks to default on senior bondholders. The most original parts of his book are the reasoned explanations of why debt restructuring of both sovereigns and banks should have been embraced early in the crisis and should be made a regular tool in future crises....
Even wrong policy choices are just that: choices, which could have been made differently. The hallmark of tragedy is that protagonists are compelled to self-destructive action. The euro’s leaders have no such lofty excuse. Nothing in the euro compelled them to keep monetary policy tight, prematurely end fiscal stimulus, or fail to write down debts. A disaster, perhaps, but no tragedy...
#shouldread
