Nobody can blame Jose Manuel Barrasso, president of the European Commission, for gloating on Tuesday’s edition of Charlie Rose as follows:
[Despite predictions about disintegration of the EU] all the steps [taken since the global financial crisis of 2008] have been for more integration, more integrated governance…
All of the doomsayers were wrong… People want to show they are more intelligent because they are predicting the worst-case scenario.
After all, the prevailing view among political economists back then was that a default contagion, which began in Greece, was “having a firm grip across Europe” – as Manoj Ladwa, senior trader at ETX Capital in London, forewarned in an April 28, 2010 Reuters report.
Hell, the most famous economic analyst and prognosticator of the day, Nouriel Roubini (aka Dr. Doom), was so wedded to this view that he recommended a triage that would cut off Greece to save the Eurozone; except that he framed it as a strategic move Greece should make to save itself.
Specifically, here’s how he diagnosed the problem:
The muddle-through approach to the Eurozone crisis has failed to resolve the fundamental problems of economic and competitiveness divergence within the union. If this continues the euro will move towards disorderly debt workouts, and eventually a break-up of the monetary union itself, as some of the weaker members crash out.
(Financial Times, June 13, 2011)
And here’s what he prescribed:
Breaking up and divorcing is painful and costly… Make no mistake: an orderly euro exit will be hard. But watching the slow disorderly implosion of the Greek economy and society will be much worse.
(Financial Times, September 19, 2011)
But the doomsayers could be forgiven their pessimism. After all, concerns about this contagion had Greeks in the streets venting rage at Germany’s hegemonic power within the Eurozone; while it had Germans in the streets spewing indignation at Greece’s indulgent and parasitic public finances.
What’s more, the conventional wisdom was that this Greco-German antagonism was just a manifestation of the irreconcilable differences between rich countries in the North and poor ones in the South that would lead inexorably to disintegration.
This is why so few pundits could have anticipated – not only that Greeks would eventually swallow virtually all of the get-your-financial-house-in-order austerity measures Germans were forcing down their throats, but also that Germans would re-elect Chancellor Angela Merkel in a landslide election this week; especially given her declared intent to link the destiny of Germany with that of the Eurozone.
In other words, Germans seem just as determined (and able) to prevent the disintegration of the Eurozone (aka the United States of Europe) today as Northerners were to prevent the disintegration of the United States of America in 1861….
Yet some of us knew it would be thus, despite the seemingly irreconcilable differences between North-South/rich-poor member states:
Greece is now looking to richer member states of the Eurozone, like Germany and France, to bail it out of an existential financial mess.
No doubt many Europeans would like to swat away the Greeks the way they swat away the Roma (Gypsies) who panhandle all over the continent. They are all too mindful, however, that Greece’s membership in the EU means that if it implodes financially, the collateral damage for the rest of them would be incalculable…
Who can blame the Germans (and others in the North) for harboring resentment over having to indulge this Zorba-like attitude among the suntanned citizens of the PIGS [namely Portugal, Italy, Greece and Spain]…? And I imagine recognizing that refusing to bail them out would be tantamount to cutting off nose to spite face only intensifies their resentment.
(“Greece Just Another Panhandling PIG in Europe,” April 29, 2010)
Accordingly, what the Germans have joined together (remember, Konrad Adenauer was an EU founding father), let no member state put asunder…? May they live happily ever after….
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