Back to Buiter

When the great man talks, it pays to listen. Or, in this case, to read.

The man in question is Willem Buiter, now chief economist at Citigroup. In his previous incarnation he was a professor at the London School of Economics — and the most entertaining and outspoken blogger on economics, via his Maverecon blog on the Financial Times website.

When Buiter took up his new post on 1 January, he stopped writing the blog, because he would no longer have the independence to write exactly what he thought, under the cover of "academic immunity".

Academics, wrote Buiter in his final post last December, "have no duty other than to state the truth as they see it" and can be "undiplomatic, blunt, tactless and outspoken in ways that are unacceptable in the wider world — the world of grown-ups."

Last week, however, saw two contributions from Buiter that helped to ease the withdrawal symptoms that some of us have been suffering from.

First, in the Financial Times, he wrote an article comparing Britain's dodgy finances to those of dodgy Greece and dodgy dodgy Enron. "Among industrial countries", said Buiter, "Britain’s economic fundamentals are uniquely awful."

Spot the difference Illustration: Bernhard Förth

The second fascinating Buiter contribution was an interview in Handelsblatt. Here he argued that the euro would survive the current Greek crisis as long as it imposed strict conditions as well as offering help. "I don't believe Angela Merkel would survive if she simply transferred money to Athens," he wrote.

Buiter also argued for a form of European fiscal authority, with the ability to raise taxes, borrow money, and help and discipline member states who get into trouble.

This degree of political union, he said, was the only way to ensure the survival of the European currency union in the longer term. A start on such a fiscal authority could be made next year, Buiter argued, with the right to raise taxes and capital likely to take "five to ten years".

That might sound wildly optimistic to most observers of euro-bureaucracy, but it surely the right way to go if future euro-crises are to be avoided.