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The Sick Man of Europe is… Europe

March 18th, 2013 - 2:29 pm

Lawrence Summers on Europe:

Perhaps it should not be surprising that Europe still looks to be in serious trouble. Growth has been dismal; the euro-zone gross domestic product has been below its 2007 level for six years, and little growth is forecast this year. For every Ireland, where there is a sense that a corner is being turned, there is a France, where questions increasingly arise about the political and economic sustainability of policy.

The controversy surrounding the decision by the European authorities to bail out Cypriot bank depositors suggests the degree of fragility in Europe. The idea that converting a small portion of deposits into equity claims in an economy with a population of barely more than 1 million could be a source of systemic risk suggests the hair-trigger character of the current situation.

I’m worried about Europe now in a way I haven’t been, since just before Gorbachev refused to send in the tanks in the fall of 1989.

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All Comments   (6)
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And these are the people and nations that the Obama administration and his party want us Americans to emulate? I have a better idea: let's build a giant cast-iron frying pan and beat ourselves over the head with it repeatedly.
1 year ago
1 year ago Link To Comment
I was asking my liberal co-worker about Cyprus this morning. He had only a vague idea of what was going on. Something about 3% of bank accounts for rich investors. That was the extent of what he knew.

And he gets all his information from NPR.

*sigh*
1 year ago
1 year ago Link To Comment
Socialism. An economic model based first upon fraud, then upon stealing.

The trick is, to fool enough people to vote for it in the first place. It's like voting to give yourself TB. Once you have it, you've got it.
1 year ago
1 year ago Link To Comment
So, Mr. Green, what provoked your concern in 1989? Sure there was upheaval and uncertainty but there was also much to hope for since nothing could worse than the previous stasis. But then, I guess you can factor in entropy at any point in history and pretty accurately forecast disintergration. I recently reread The Sun Also Rises with that memorable description of how one goes bankrupt...first slowly and then all at once. I am afraid we are entering the end of the slow part....
1 year ago
1 year ago Link To Comment
He said "since *before* Gorbachev refused to send in the tanks in 1989."

Before that fateful decision, there was every reason, based on prior history with Soviet imperial policy, to expect that the tanks would indeed roll, and that a crisis might unfold destabilizing the Cold War balance in ways no one would much appreciate.

It helps to remember -- for all that the world was simpler then, it was largely because it was perched on a knife's edge.
1 year ago
1 year ago Link To Comment

Personally, I've got very little attention span left for Europe. I'm too busy worrying about the U.S.

I have been paying attention to Cyprus, though. Now that the taboo against abrogating deposit insurance has been broken, the real end-game begins. Things are gonna get real, now.
1 year ago
1 year ago Link To Comment
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