Dr Dimitris P. Sotiropoulos (OU)
Austerity policies in the wake of the 2008 global financial meltdown have left a host of developed capitalist economies struggling with very high levels of sovereign indebtedness. Given that prospects for economic growth still remain anaemic, and that financial risks have not been completely eliminated, the recovery process is slow and fragile. Contemporary policy-making thus encounters an unusual debt overhang puzzle. How important is this issue for the European economies? Is there an easy way out? Should policy-makers continue to rely on ‘business as usual’, or should they seek answers in the unchartered waters of unorthodox solutions? How important is central banking to tackling the problem? Drawing on my policy proposal for the resolution to the European sovereign debt overhang and my book on the political economy of contemporary financialised capitalism, the seminar will discuss a number of policy options in relation to how public debt can be managed in a sustainable way. The key lessons to policy-makers are that economies with weak currencies are better off within monetary unions and that unorthodox central bank policies are the only means to overcome the contradictions of a monetary union in the absence of fiscal integration.
