EU’s political elite

Ten years ago, we stated that Europe’s experiment with a common currency was doomed to failure. Last year, as the EU’s political elite dithered over rescue packages of thirty and forty billion Euros, we wrote that a mere stabilization of the Euro–crisis would require at least 2.5 to 3.5 trillion. Today’s situation is significantly worse than what we anticipated, mainly because an escalating fiscal crisis is now accompanied by severe banking problems. We fear for Europe and cannot sum up our feelings better than we did last fall, when we said “Sadly, if $3.5 trillion were pumped into the system to “stabilize” the crisis, things wouldn’t look much better. This is because the money would be used to prop up cascading bond prices and bail out banks, while the real part of the economy would be subjected to severe austerity. All this will do is turn a financial calamity into political turmoil, which will before long threaten the tradition of democracy

itself.”