Saturday, June 4, 2011

Eurozone Slow-motion Train Wreck

If anyone thinks that the Eurozone is under control, they need to take off the blinders. Greece is, to use a technical term, a mess. It does not have the political ability to effect the changes needed. It is not only insolvent, but illiquid. This is a fundamental, terminal problem. After Greece came Ireland, then Portugal. The elephant in the room is Spain and it may be next. The entire Eurozone is a slow-motion train wreck and that fact is beginning to sink in. If all the other reports of disintegration were not enough, this latest from Martin Wolf in the FT slams the door.

I just want to add a point from a political angle. If there was a component adding to the crises, it is the positions taken by Germany which, with the help of its elected officials, have demonized those countries unfortunate enough not to be German. The desperate political campaigns of Merkel and her party to channel and support arrogant and Germany-first attitudes have severely damaged the idea of Europe. The public statements of German government officials at the highest levels regarding Greece, for example, have damaged the integrity of the EU. 

The crisis is getting worse, not better.

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