Tuesday, October 04, 2011

What a mess

Larry Elliot finds the only possible explanation for the Euro crisis in Lewis Carroll.
The climax of Alice in Wonderland is the courtroom scene in which the issue is "Who stole the tarts?" In the case of the eurozone, the easy answer is that it is Greece, which failed to play by the rules, borrowing too much and cooking the books so that the rest of the members of the single currency club were ignorant of the dire state of the Hellenic public finances. In fact, the real culprit is Germany, which has failed to appreciate that for monetary union to work, the big creditor nations have a responsibility to help the debtor nations by expanding domestic demand. The German political class appears to believe both that every country in the euro area can be as competitive as Germany and that Germany, in those circumstances, will continue to run a massive trade surplus. That's a logical absurdity the Reverend Dodgson would certainly have appreciated.
In the meantime, faced with the need for action, finance ministers have, once again, decided to dither.

What of the people caught up in this? Well, never underestimate their resourcefulness or their sense of justice. But for every positive action there are also the consequences of despair. Then again, where does the welfare of people fit into the world view of the technocrats trying to fix the economy of Wonderland?

More through the looking glass here.


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