How to start paying off southern Europe's debts

Northern Europe needs its neighbours to pay back its debts soon " before its baby boomers retire

Ten years after the Great Recession plumbed economic depths unseen since the Great Depression, it is necessary to step back from quotidian politics to get a glimpse of the bigger picture. Europeans need to ask themselves where they have been, and where they are headed next on their journey.

Twenty years ago, in 1998, exchange rates among many countries in the European Union became irrevocably fixed in preparation for the euro. Suddenly, near-bankrupt southern European countries no longer had to pay huge interest premiums of around five to 20 percentage points relative to Germany. So, awash in cheap loans, southern Europe experienced a debt-financed economic boom that pushed wages and prices sky-high. Eventually, that boom became a bubble.

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