>To what extent is the financial crisis to blame for the economic problems in the euro zone?

The economic difficulties in the euro zone are most often blamed on the financial crisis, with the following arguments:

− the banking losses led to the credit contraction;
− the financial markets lost all liquidity and closed down;
− global trade came to a halt due to the contraction in trade credit;
− the fiscal deficits stem from the bailout of financial intermediaries.

However, the economic crisis can also be blamed on problems in the real economy:
− poor productive specialisation (construction) and deindustrialisation;
− excess private sector indebtedness, caused by monetary policies aimed at offsetting deindustrialisation and the weakness of wages.

This weakness is a result of either productive specialisation or distortion of income sharing.
In our view, it is in accordance with the facts to say that the most drastic part of the crisis was due to the financial crisis, but that the permanent, structural part of the crisis was due to the real economy.

To read the full report: FINANCIAL CRISIS