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Pilots Bicker, Plane Wobbles: Latest EU Fudge May Not Be Enough

The French and the Germans have come to a grand bargain, the eurozone summit is making progress and the markets are humming along. Crisis averted? More likely, postponed.

With only sketchy details available as to the shape of the deal, it already seems that these measures won’t be enough to deal with the underlying problems. Fiddling with Greece while Spain and Italy melt still looks more like denial than a serious approach to the biggest European crisis since the Berlin Airlift.

Mohamed El-Erian says demonstrations of ineptitude and impotence such as this are unnerving markets and making the situation worse and provides a useful analogy:

I don’t know about you, but whenever I am in an airplane experiencing turbulence, I draw comfort from the belief that the pilots sitting behind the cockpit’s closed door know what to do. I would feel very differently if, through an open door, I observed pilots who were frustrated at the poor responsiveness of the plane’s controls, arguing about their next step, and getting no help whatsoever from the operator’s manuals.

He’s got it exactly right. The pattern to date in this crisis has been that after weeks and months of feckless procrastination European leaders whomp up a fudge of some kind; markets rejoice for a few days, and then grim reality returns as the inadequacies of the fudge become clear.

Let’s hope this time is different; witless dithering is not what the world expects or needs from Europe right now.

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