Financial Times
June 19, 2011
Last week taught us something important about the political economy of the eurozone.
There were two serious and overlapping crises. The first was a deteriorating dispute between Germany and the European Central Bank. It was about whether private investors should be forced to pay a contribution to the next loan programme for Greece. The dispute promised to derail the discussion for a follow-up loan, and could have forced Greece into a default. The second crisis was the near-collapse of the government of George Papandreou, Greek prime minister.
At the end of the week, Germany capitulated. And the Greek prime minister reshuffled his cabinet, ending up with with more reformers in it than before.
During the week, market commentators fell over themselves to predict the imminent default of Greece, and the inevitable break-up of the eurozone. They were wrong. Both may yet happen. Greek politics is unpredictable. And so may be the reaction of German parliamentarians. But it is not going to happen next week, or next month. And I am fairly sure that it is not going to happen over the next year either.
More
No comments:
Post a Comment