WASHINGTON, May 7 (Xinhua) -- Nobel Prize-winning economist Paul Krugman on Monday said that Francois Hollande's victory in the French presidential election marks the end of "Merkozy" era, the Franco-German axis that has enforced the austerity policies across Europe during the past two years.
The Merkozy-style spending cuts in a depressed economy make the depression deeper, Krugman noted in his latest column article on The New York Times.
The austerity measures adopted in many European countries have failed to boost market confidence, and the claim that slashing government spending would encourage consumers and businesses to spend more has been overwhelmingly refuted by the experience of the past two years, he contended.
One way to solve the lingering eurozone debt crisis is to break up the euro, as "Europe wouldn't be in this fix if Greece still had its drachma, Spain its peseta, Ireland its punt, and so on, because Greece and Spain would have what they now lack: a quick way to restore cost-competitiveness and boost exports, namely devaluation."
But breaking up the euro would be disruptive, and would also represent a huge defeat for the "European project," the long-run effort to promote peace and democracy through closer integration, Krugman added.
Germans would cling to the failed austerity strategy, but they would no longer have unquestioning support from the Elysee Palace, which means both the euro and the European project have a better chance of surviving than they did a few days ago, he stressed.