To me, the Lebanese crisis looks like, in the first instance, as a foreign exchange and international transactions crisis, a classic developing country crisis in the era of financialisation. As such it is closely connected to the country’s policy on the exchange rate. The fixed peg policy chosen by the Lebanese ruling class and operated by the central bank and the government for a long time, has proven destructive. The country’s economy is under great pressure because the strong pound has damaged Lebanese competitiveness on an international scale and facilitated the growth of domestic credit.
The crisis facing the eurozone looks at first sight as German efficiency clashing with Portuguese, Irish, Greek and Spanish sloppiness. But in many respects Germany has performed worse than the “peripheral” countries in the last decade. The largest economy of the eurozone has been marked by slow growth, poor domestic demand, weak investment, high unemployment, […]