Hanser: Munich, 2012, 418 pages.
In January 2002 freshly minted euro notes were distributed, amidst high hopes, among the members of the newly created Eurozone. Today, just ten years later, the euro project is in the throes of a major crisis. What began as a European peace project has led to dispute and discontent that can only be held in check by heavy borrowing from the savings accounts of citizens of the Eurozone’s core countries.
Some euro countries that have lived beyond their means and accumulated high external debt since the introduction of the euro now find themselves on the verge of bankruptcy. Their central banks, in order to solve their economy's liquidity problems, are resorting to the printing press. With the European Central Bank's (ECB) approval, they are withdrawing savings from those countries with more solid economies using a virtual cash dispenser that they were allowed to set up upon joining the euro. The only way to prevent the crisis countries from continuing to do this is to supply them with ever more capital via official bail-out packages. And Germany is not the only country caught in this trap.
If there is to be any future for the euro project, tougher budget constraints will have to be re-introduced, and the countries that cannot handle them must be given the opportunity to restore their competitiveness by temporarily exiting the euro.
In his latest book, “Die Target Falle” (“The Target Trap”), Hans-Werner Sinn offers a comprehensive analysis of the issues outlined above.
"The euro crisis has now spread from the banks to the states and the real economy; and is perceived to be increasingly precarious and incontrollable, despite the fact that crisis countries in the euro area have been receiving financial support via the ECB and bailout packages for the duration of the crisis. Dizzying sums of bailout funds have been approved by parliaments and the ECB Council at an increasingly rushed pace in a bid to control the Eurosystem's intensifying problems, yet politicians still do not seem able to bring the crisis under control.
The focus of this book is the issue of Target credit, which has flowed massively through the ECB system and dwarfs the official bail-out credit granted to date. Target credit is a complex topic that is difficult to grasp. Politicians ignored its importance for a long time. After reading this book, however, everyone will understand what Target is about and will realise that the wealth of every single citizen is at stake."
"Die Target-Falle – Gefahren für unser Geld und unsere Kinder"
by Hans-Werner Sinn
Publication date: 8 Oct 2012
Hardback, 418 pages
Price: € 19.90 (in Germany) / sFR (CH) 27.90 / € 20.50 (in Austria)
E-Book, ISBN 978-3-446-43391-5
“Europas Schuldenkrise”, Frankfurter Allgemeine Zeitung (online), 28.01.2013.
“Ein Bündnis der Ungleichen”, Handelsblatt, 08.10.2012, No. 194, p. 48.
“So wurden die Euro-Retter erpressbar”, Frankfurter Allgemeine Zeitung, 07.10.2012, No. 40, p. 32.
“Die Target-Falle” (The Target Trap) by Hans-Werner Sinn ...read on
Book presentation by Hans-Werner Sinn
Phoenix, VOR ORT, 12.10.2012 (Video).