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Beware of Greeks Bearing Debts
Europe’s Double Crisis
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  • Jacksonian_Libertarian

    “The post-World War II European order, as reformed and extended after the Cold War, is the greatest success of international politics since the Enlightenment.”

    “The greatest success of international politics”, shouldn’t success be defined as making all the members wealthier, stronger, and more SUCCESSFUL? Europe has been in decline and losing ground since Ronald Reagan, so I would argue that the EU and the Euro have been the biggest mistake in international politics since the Enlightenment.

    • JR

      While I agree with your overall point that Europe has been declining for decades, I think problems within the EU are symptoms of that decline, not the cause.

  • Andrew Allison

    The worst (and still possible) outcome would have been for the EU to cave to Greece’s demands for relief now and reform later. There appears, as of today, to be a consensus that Greece (and more importantly, Italy, Spain and France) must either clean up its act or default and leave the eurozone. The underlying problem is not lack of leadership but lack of integrity. As the newly-appointed head of the EC executive (Jean-Claude Juncker) once said, “We all know what to do, we just don’t know how to get re-elected after we’ve done it”

    • gabrielsyme

      Actually, they don’t know either. The rational thing for Spain, Italy, Portugal, etc. to do would be to form a Mediterranean currency zone, or go back to their own currencies. The willingness of their leaders to instead fall into a debt/deflation spiral shows a fundamental unwillingness to address the real root problem. The myth of Europe has led European elites to condemn millions to unemployment and frustration.

      • Andrew Allison

        I think that “willingness of their leaders to instead fall into a debt/deflation spiral” rather makes Juncker’s case. I’m pretty sure that Renzi, for example, knows what needs to be done in Italy but lacks the support to get it done.
        I couldn’t agree more about the members of Club Med getting out of the eurozone, but forming another currency zone would carry the same fatal flaw, namely the lack of an enforceable common monetary policy. I don’t see any way out but their own individual currencies, which would lose value (devaluation) to reflect the economic conditions in each country. Italy, the third largest economy in the EU, is the real danger to the eurozone.

        • Curious Mayhem

          Yes, but France is as well. Marine Le Pen’s election in 2017 as French president, if it happens, would seal the fate of the euro and possibly the EU itself.

  • Pete

    “The post-World War II European order, as reformed and extended after the Cold War, is the greatest success of international politics since the Enlightenment. ”

    That sounds like an exaggeration to me. Perhaps the demise of the USSR without a shot being fired is a greater achievement.

    • Curious Mayhem

      I would say that the whole post-1945 rebuilding of Europe and its post-1989 extension, as a whole, do constitute the greatest achievement in global politics since … I don’t know when.

      But the eurozone debacle, Vladimir Putin, and the narcissist in the White House all threaten those achievements.

  • Ellen

    I sincerely hope we will no longer hear any more lectures from Europeans about how they are the moral arbiters of our contemporary world. Their intractable and clearly unsolvable problems are a fitting comeuppance to them. They should also take back their Noble Peace Prize from Obama, and get rid of it altogether, along with the Euro. Soon we will be back to the drachma, lira, peso, kroner, and franc.

  • Anthony
  • Curious Mayhem

    Why does “everything” need to be done to save the euro? It was the worst domestic mistake in Europe’s post-1945 history. It’s trapped the whole Club Mub set of countries in an inescapable deflationary trap and weakened even larger economies like Italy’s and France’s, while revving up the economies of Germany, Holland, et al., into unheard-of territory of hyper-export booms. The euro was the medium by which politicians induced the large German and French banks to overlend to countries that have little prospect of paying back. Even economists who pushed for a euro objected to the inclusion of the weaker economies in a single-currency system — they knew what would happen. The attemped north-south integration is a relic of the Cold War. East-west integration would have been more natural, at least west of the former Soviet Union.

    The right answer is that Germany and France, who hatched this monstrosity. will eventually get it and dissolve the eurozone — but not before far more damage is done.

    • Andrew Allison

      I suspect that just as there’s no mechanism to eject a member, there’s no mechanism to dissolve the eurozone. Germany won’t leave because it’s an export-driven economy with about half its exports going to the rest of the eurozone, and leaving would cause significant currency appreciation and loss of competitiveness. This, ultimately, is why everything must be done to save the euro (for as long as possible).

      • Curious Mayhem

        Germany will give up once they’re burdened with a serious and open-ended commitment to support the deficit economies.

        • Andrew Allison

          IMNHO Germany’s fugetaboutit response to Greece’s request for open-ended support for deficit economies makes it clear that a Gerexit isn’t going to happen.

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