New Yorker
October 24, 2011
What is going on in Europe gets weirder and weirder.
With two days to go until the continent’s leaders reach their self-imposed deadline for reaching an agreement on yet another “solution” to the long-running debt crisis, investors appear to be betting that all will be well. The U.S. stock market was up again on Monday morning. Since the start of October, when France and Germany conceded that urgent action needed to be taken, it has risen ten per cent.
To put it mildly, this appears to be a leap of faith.
Details of the likely agreement are beginning to emerge, and, lo and behold, it hinges on many of the things that got the global economy into this mess to begin with: leverage (borrowing), financial engineering, and a blizzard of confusing acronyms. It is as if some of the unemployed Wall Street geniuses who gave us S.I.V.s, C.D.O.s, and C.D.S.s had been hired by the European Union to work their magic on the debts of countries such as Greece, Portugal, and Italy.
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