AEI's Makin: As Greece Leaves, What Happens to the World's Economy?

In the latest economic outlook, American Enterprise Institute (AEI) economist John Makin examines the euro endgame.

Makin explains that austerity policies and bank deleveraging in exchange for loans has resulted in a predictable recession with plummeting employment, incomes, and prices.

With Greece’s imminent departure from the eurozone, what will happen to Germany and the rest of Europe?

Makin explains that:

  • German deflationary policies are inflicting economic pain throughout Europe—most notably in Southern Europe—and the resulting leftist political backlash has put the euro in danger.
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  • Greece’s probable exit from the eurozone will have a contagious effect on the rest of Europe, as well as the world economy.
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  • If Germany refuses to lead Europe toward fiscal union and to accept higher inflation, the results could be a fragmented eurozone, a collapsed European financial system, and a deflationary shock in Germany.
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John Makin is a former consultant to the US Treasury Department, the Congressional Budget Office, and the International Monetary Fund. He is available for interviews and can be reached at jmakin@aei.org or through his research assistant daniel.hanson@aei.org.

CHARTS: The economic suffering in Southern Europe and Ireland is clearly demonstrated in the extraordinary rise in overall unemployment  and youth unemployment rates in Europe since 2008 as seen in the charts below.

The economic suffering in Southern Europe and Ireland is clearly demonstrated in the extraordinary rise in overall unemployment  and youth unemployment rates in Europe since 2008 as seen in the charts below.

View the larger overall unemployment or youth unemployment chart.

For help reaching any AEI scholar and for all other media requests, please contact Jesse Blumenthal at jesse.blumenthal@aei.org (202.862.4870).

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About the Author

 

John H.
Makin
  • John H. Makin is a resident scholar at the American Enterprise Institute (AEI) where he studies the US economy, monetary policy, financial markets, corporate taxation and banking. He also studies and writes frequently about Japanese, Chinese and European economic issues.

    Makin has served as a consultant to the US Treasury Department, the Congressional Budget Office, and the International Monetary Fund. He spent twenty years on Wall Street as the chief economist, and later as a principal of Caxton Associates a trading and investment firm. Earlier, Makin taught economics at various universities including the University of Virginia. He has also been a scholar at the Bank of Japan, the Federal Reserve Bank of San Francisco, the Federal Bank of Chicago, and the National Bureau of Economic Research. A prolific writer, Makin is the author of numerous books and articles on financial, monetary, and fiscal policy. Makin also writes AEI's monthly Economic Outlook which pairs insightful research with current economic topics.

    Makin received his doctorate and master’s degree in economics from University of Chicago, and bachelor’s degree in economics from Trinity College.


    Follow John Makin on Twitter.

  • Phone: 202-862-5828
    Email: jmakin@aei.org
  • Assistant Info

    Name: Brittany Pineros
    Phone: 202-862-5926
    Email: brittany.pineros@aei.org

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