First, there’s another Michael Lewis feature in which he takes his individual brand of comic-finance-travel journalism to Germany.
The only economically plausible scenario is that Germans, with a bit of help from a rapidly shrinking population of solvent European countries, suck it up, work harder, and pay for everyone else. But what is economically plausible appears to be politically unacceptable. The German people all know at least one fact about the euro: that before they agreed to trade in their deutsche marks their leaders promised them, explicitly, they would never be required to bail out other countries. That rule was created with the founding of the European Central Bank (E.C.B.)—and was violated a year ago. The German public is every day more upset by the violation—so upset that Chancellor Angela Merkel, who has a reputation for reading the public mood, hasn’t even bothered to try to go before the German people to persuade them that it might be in their interests to help the Greeks.
There’s also a Q & A with Lewis about his piece.
If that’s too long, I’ve been looking around the global financial press for a big picture overview of the current crisis and you really can’t do better that Brian Fallow’s column in the Herald yesterday:
Suppose that New Zealand, attracted by the prospect of Australian interest rates, adopted the aussie dollar.
Suppose further that the price of that was that before a Finance Minister could present a Budget to Parliament he had to run it past Canberra: “Nah, mate, come back with one with less spending and more tax. We won’t underwrite this.”
How would we feel?
In Europe’s case, however, something like that may come to be seen as the lesser evil.
If the alternative to fiscal integration is monetary disintegration – with countries leaving the euro system and defaulting on their debts – what would it cost taxpayers in the remainder of the euro area to bail out their banks, when they are left holding the bag?
The take-home message I get from all this is that we’re still in the midst of the Global Financial Crisis – we currently see it as being a couple of months in late 2008, subsequent to the collapse of Lehmans, but historically it will refer to a period from, say, 2008 to 2013 (or whenever).
And while the first stage of the GFC was a classic ‘crisis of capitalism’, straight outa’ Karl Marx (now accompanied with riots by his detested lumpen-proletariat) it now looks more like a crisis of regulated capitalism, as politicians and central banks try and fail to resolve the issues.