Europe is at last channeling Alexander Hamilton

In the face of predictions of an 18-month battle against COVID-19, it is  difficult to overestimate the potential fiscal costs the euro area could incur from fighting the virus, as some economic forecasts project a 15 percent decline in euro area GDP in the first half of 2020

 
Europe’s collective and  forceful intervention to rescue Italy and other euro area countries at economic risk from the coronavirus (COVID-19) plague has been unprecedented in more ways than one. The €750 billion ($810 billion) to address the pandemic was itself unparalleled, comparable to current estimates of the US rescue.[1] But with its de facto open-ended Pandemic Emergency Purchase Program (PEPP), the European Central Bank (ECB) has brought the continent closer to political and financial unity than was previously imaginable, rescuing a dream that has receded in the last few years.

To understand why, look no further than America’s own “Hamiltonian moment” in 1790.

In the historic constitutional compromise forged by the first US Treasury secretary Alexander Hamilton, James Madison, and Thomas Jefferson in that year, the parties agreed to placing the nation’s capital between Maryland and Jefferson’s home state Virginia. More important, of course, the US federal government assumed all the debt incurred by the US states during the War of Independence, laying the foundation for a strong central federal government in the United States.

In the face of predictions of an 18-month battle against COVID-19, it is  difficult to overestimate the potential fiscal costs the euro area could incur from fighting the virus, as some economic forecasts project a 15 percent decline in euro area GDP in the first half of 2020.

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Πηγή: piie.com