Commentary
Uri Dadush
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Source: Getty
Other
The Euro and Washington
When the United States says that this is Europe’s problem to deal with and Europe is rich, it should bear in mind that a collapse of the euro would be disastrous for the United States
By Uri Dadush
Published on Dec 17, 2011
How badly would a collapse of the euro hurt the United States? Is there anything that Washington can do to help Europe?
When the United States says that this is Europe’s problem to deal with and Europe is rich, it should bear in mind that a collapse of the euro would be disastrous for the United States. It should also bear in mind the magnitude of the suffering in the European periphery.
It is true that Washington hasn’t even begun to scratch the surface of the fiscal problems in the United States, but it can and should still help. Unfortunately, the United States has told its traditional European allies that it won’t help with the crisis beyond the federal reserve bank providing some swap lines.
It is true that Washington hasn’t even begun to scratch the surface of the fiscal problems in the United States, but it can and should still help. Unfortunately, the United States has told its traditional European allies that it won’t help with the crisis beyond the federal reserve bank providing some swap lines.
Read more
But the euro crisis is a global problem. It is a European problem and it is an American problem. The United States will ultimately pay for the euro crisis—the question is only how it will pay. There are two options. It will either take out relatively cheap insurance through an expansion of the IMF that is needed anyway or it will pay in a terrible world recession. Washington can’t stand on the sidelines. MORE►
About the Author
Uri Dadush
Former Senior Associate, International Economics Program
Dadush was a senior associate at the Carnegie Endowment for International Peace. He focuses on trends in the global economy and is currently tracking developments in the eurozone crisis.
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Carnegie India does not take institutional positions on public policy issues; the views represented herein are those of the author(s) and do not necessarily reflect the views of Carnegie, its staff, or its trustees.
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