by Paul Krugman
A followup to my post inspired by troubles in Finland: it’s worth emphasizing just how bad Finland’s performance has been. For Finns, the great depression they remember is the slump at the beginning of the 1990s, driven by a combination of a bursting housing bubble and the collapse of the Soviet Union next door. The result was a very nasty slump, and a delayed recovery. But this time, although the slump in per capita GDP never got quite as deep, has been far more persistent:
Why can’t Finland recover this time? Debt is not a problem; borrowing costs are very low. But it’s all about the euro straitjacket…..