03 June 2015

I Quote the Prophet, Bear Who Swims

Over a year ago, the Bear Who Swims predicted to me (via email, not his blog) that the Europe was on a path to another war.

If you follow the history of Europe, there seems to be one every hundred years or so.

Well, now the Shrill One, Nobel Prize winning economist Paul Krugman, is making allusions to seeing the same thing:
U.S. officials are generally cautious about intervening in European policy debates. The European Union is, after all, an economic superpower in its own right — far too big and rich for America to have much direct influence — led by sophisticated people who should be able to manage their own affairs. So it’s startling to learn that Jacob Lew, the Treasury secretary, recently warned Europeans that they had better settle the Greek situation soon, lest there be a destructive “accident.”

But I understand why Mr. Lew said what he did. A forced Greek exit from the euro would create huge economic and political risks, yet Europe seems to be sleepwalking toward that outcome. So Mr. Lew was doing his best to deliver a wake-up call.

And yes, the allusion to Christopher Clark’s recent magisterial book on the origins of World War I, The Sleepwalkers,” is deliberate. There’s a definite 1914 feeling to what’s happening, a sense that pride, annoyance, and sheer miscalculation are leading Europe off a cliff it could and should have avoided.


Yet there seems to be more to it than lack of trust. Some major players seem strangely fatalistic, willing and even anxious to get on with the catastrophe – a sort of modern version of the “spirit of 1914,” in which many people were enthusiastic about the prospect of war. These players have convinced themselves that the rest of Europe can shrug off a Greek exit from the euro, and that such an exit might even have a salutary effect by showing the price of bad behavior.

But they are making a terrible mistake. Even in the short run, the financial safeguards that would supposedly contain the effects of a Greek exit have never been tested, and could well fail. Beyond that, Greece is, like it or not, part of the European Union, and its troubles would surely spill over to the rest of the union even if the financial bulwarks hold.
I generally agree with my brother, aka "Bear who Swims", that Europe is heading back into what seems to be a once a century path to conflict, though I differ in degree:  He posits a shooting war, and I expect something analogous to a Cold War along with a dissolution of the EU.

And once again, I'll blame the Germans.

H/T Stephen Saroff      o o  The Bear who Swims      
                         oo    oo


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