December 28, 2011

WALTER RUSSELL MEAD: Europe Is Still Hip Deep In The Bad Stuff.

Combined intervention by the world’s central banks and an open door policy by the ECB to European banks wanting to borrow lots of money fast calmed the world’s markets this month. We are no longer having to think about whether the international financial system might melt down over a long weekend, and the relief plus continuing good if not spectacular news from the US economy made December a much better month than the world feared.

But if Europe dodged the charge of an angry bear last month, it is still hopelessly lost in the woods. The proposal for a new, souped up fiscal union treaty has bogged down in the usual horsetrading, favor swapping and generally ineffective European legislative process. More profoundly, the core cultural problem at the heart of the economic problem remains: northern and southern Europe are different places that need different rules, and the euro requires them to live and play as one.

Good luck with that.