Best-selling author John Mauldin of Mauldin Economics says the EU is only left with choices that range from bad to disastrous. Meanwhile, Republicans and Democrats will have to hold hands and walk off the cliff together to solve U.S. economic problems. In this exclusive Gold Report interview, Mauldin expands on his comments at the Casey Conference, "Navigating the Politicized Economy." Read more about the consequences of those choices and necessary compromises—and how he would reform the U.S. tax code.
The Gold Report: Back in January you said the European Union (EU) would have to make serious political decisions with "major economic consequences" in 2012. Is the EU making those decisions and what is your prognosis?
John Mauldin: It is doing its best to avoid making decisions, but is being forced to make them, ad hoc. The EU allowed the European Central Bank (ECB) to print money to monetize debt. The ECB is buying time for governments to achieve structural reform.
Structural reform, not the debt, is the problem. The debt is a symptom of bad policies, of a system set up for failure. The EU translated a theory into fact, and the theory did not work.
TGR: Is that theory the EU itself?
JM: The theory is the monetary union. If the EU had just left the trade union alone without trying to layer the monetary union on, it would have been just fine. But the EU wanted a single currency. It was part of the Europhiles' dream. The EU thinks the monetary union is the sine qua non and it is not. Continue reading "John Mauldin's Prescription for Avoiding Economic Catastrophe"