ABSTRACT
This chapter offers a post-Keynesian analysis of the crisis that puts neoliberalism at the very heart of the problem both as a cause of the imbalances at its root and as an economic policy regime that has turned the financial crisis into a sovereign debt crisis. It discusses neoliberalism and the EMU's economic policy regime. The chapter analyses the export-driven and debt-driven growth models in Europe. It highlights how the neoliberal European economic policy regime has amplified the crisis and discusses the dialectics of public and private debt and the costs of neoliberal policies, concludes by outlining a Keynesian alternative. The post-Keynesian macroeconomic framework is capable of explaining these developments. Bhaduri and Marglin proposed a macro model that allows for wage-led, as well as profit-led demand regimes. European countries, where they financed property bubbles and rising household debt. In fact, the situation differed by country, but a massive increase in private household debt is the hallmark of this growth.
