Video: Shortlist on the Wolfson Economics Prize for eurozone contingency planning
I got these videos from the Policy Exchange website highlighting the Wolfson Economics Prize.
The Wolfson Economics Prize, which challenges the world’s brightest economists to prepare a contingency plan for a break-up of the Eurozone, today (3rd April, 2012) unveiled a shortlist of five finalists.
The shortlisted entries, though all very different from each other, provide valuable ideas about how best to manage a member state leaving the euro.
The judges have given the finalists the opportunity to address key questions about their entry. Finalists will be given until the 29th of May to develop and resubmit their entries. Everyone who has progressed to this stage will be guaranteed a £10,000 share of the prize. The winner(s) of the Wolfson Economics Prize will be announced on the 5th of July.
The finalist’s essays can be seen below
I like Jonathan Tepper’s commentary about currency unions over the past century. His analysis says that the breakups have been feasible. The real problem in Europe’s case is overindebtedness meaning that the potential exiting euro zone countries cannot service their existing debt burdens at par at prevailing interest rates. In my view, the easiest way to deal with this problem is to convert the euro debt at par back into a national currency and allow that currency to float. See "How and why Greece will leave the euro zone".
The Shortlist
a) Catherine Dobbs – The NEWNEY approach to unscrambling the Euro
b) Roger Bootle – Leaving the euro: A practical guide
c) Jonathan Tepper – A Primer on the Euro Breakup: Default, Exit and Devaluation as the Optimal Solution
d) Jens Nordvig – Planning for an orderly break-up of the European Monetary Union
Here are the videos explaining the plans of four of the five finalists. Enjoy.
Source: Policy Exchange
I have gone through the submissions on fast forward.
The one by Catherine Dobbs is quite brilliant. Such a solution would in addition probably be politically possible too. Looking forward to substantive comments on her daring proposal.
The other submissions are good catalogues of have a break up could be executed. Mindboggling confirmations of how monumental and enourmously risky such an undertaking would/will be. There is no parallel in history really. No doubt, a breakup would be so complex and the stakes so high that a Depression would be hard to avoid.
The conclusion would therefore be that one should avoid a euro break-up. It would in fact probably be less difficult to create the United States of Europe than to break up the euro zone. The USE would take several years to create with proper federal institutions, but a clear signal about its creation, plus the issuance of eurobonds pronto, would do the trick.
As regards Greece, Portugal and possibly Ireland, they could become members of the USE, but could pontentially use the 2nd tier euro as suggested by Dobbs. I cannot see how those economies would become competitive over time if they kept the euro, even inside the USE.
This was a prize for the worlds ‘best and brightest economists’
1 submission by an engineer – Catherine Dobbs
1 by two mathemeticians
1 by the worlds leading expert on currency hedging – an economist
2 by global macro firms – one of which is run by an historian not a trained economist.
Of those Roger Bootle in 2003 predicted the Financial crash on the same basis as most of the others who did such as Keen and Hudson
From 1 2003 review
Publisher: Nicholas Brealey Publishing (2003), ISBN: 1857882822
“Money for Nothing” is a somewhat controversial book written by the (London) City economist Roger Bootle. The author is a well known doomsayer who regularly hits the headlines with predictions of impending deflation and housing price crashes, never mind stock market crashes.
I’ve never taken seriously any economist spouting opinions on the real estate market (always dramatic, always wrong – witness the numerous press articles and parroting real estate agents), let alone about deflation.’
And Johnathen Teppler seems to hold firmly post-Keynesian views on debt and money. which you can find in his well known book Endgame. He qualification is as an Historian.
So in short not one neocon economist amongst them, no one who would have got a phd at freshwater or saltwater these days – part from perhaps Neil Record who is difficult to classify as he is an expert in a specialist field outside the mainstream that he largely invented.
It would seem that this is the week that we can call as the end of the beginning of the end for neo-con economists. They cant model the real world and they have nothing to say about the most pressing economic policy issue of today – the eurozone crisis.