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25 May, 2010 06:42

Europe failed crisis test – Nobel Prize winner

The worst part of the crisis is over, but the recovery will take many years as the rate of improvement is low, announced Nobel Prize winner in Economics Professor Eric Maskin from the Institute for Advanced Study.

“From the sub-prime crisis we learnt the importance of quick and vigorous response,” acknowledged Maskin, adding that “a trillion dollar package is a pretty vigorous package.”

The crisis in the Euro zone demands a restructuring in fiscal authority by centralizing both monetary and fiscal policy, believes the economist, “so that what happened in Greece does not happen again.”

Maskin predicted that what happened to Greece is not unique and “there will be serious recessions in the future.”

“This was the first serious recession since the beginning of the Euro zone. This was the first test, and Europe failed the test.”

Without serious changes the euro is not a sustainable currency in the long run, he said.

Eric Maskin commented on Russia giving state support to certain industries. He insists that once the state paid the setup costs and helped get those industries off the ground providing supervision, it should step back.

“If you see that your neighbour is being treated better than you by the system – that inspires resentment, that inspires feelings which do not promote a successful society,” Maskin said adding that “keeping a level plain field is an important aspiration.”