That's going to mean a lot of very blue faces.

[randomness]

I realize hardly anyone on the western side of the North Atlantic noticed what Angela Merkel said at her party's regional conference over the weekend, but it isn't terribly encouraging for anyone who wants to see some resolution to the Eurozone crisis anytime soon.

From Deutsche Welle:

Chancellor Angela Merkel has said it will take five years, or even longer, to overcome the eurozone debt crisis.

...

The chancellor told members of her Christian Democrat (CDU) party in Mecklenburg-Western Pomerania there were no rapid solutions to the eurozone crisis.

"We have to hold our breath for five years or more," Merkel warned delegates in the city of Sternberg. "Whoever thinks this can be fixed in one or two years is wrong."

In other words, don't get your hopes up.

Comments

[mizkit.livejournal.com]

I expect we'll be lucky if it doesn't get much, much worse before it gets better, but certainly over here all signs point to it getting far worse.

[r-ness.livejournal.com]

I think you're right about that. In no small part that's because no one in charge in Europe seems to have any better idea of what to do than to hold their breath.

[mizkit.livejournal.com]

Oh, I think they know what to do. I think they're choosing not to do it, because it is in their personal best interests to keep the bankers happy. I think it may take revolution to change the situation, and I don't know that people are that desperate yet.

[achinhibitor.livejournal.com]

Part of the trouble is that much of the dubious debt is held by banks in Germany and France, and properly recognizing that those debts won't be paid back would cause the German and French governments to have to recapitalize their banking industries immediately. Better for those governments to leave that need unrecognized.

[r-ness.livejournal.com]

I don't know. All that's been tried so far is propping up failed banks, blaming evil Anglo-Saxon speculators, and endless can-kicking, while Europe's economy circles the drain.

If all there is to look forward to is more of that, then I'm a pessimist.

[achinhibitor.livejournal.com]

I would have said that all crises get resolved eventually, "one way or another". But in a modern, open economy, that might not be true. Once a government has enough debt per-capita, that debt becomes an obligation that is assumed by anyone immigrating -- and shed by anyone emmigrating. Once the per-capita debt exceeds the net present value of any "location services" provided by the government, people start fleeing. At that point, only default can save them.

[achinhibitor.livejournal.com]

We are four or five years into cleaning up a nasty financial crisis, and it will be several years more before it's cleaned up. (But I see recent reports that the huge run-up in mortgage debt is being whittled down steadily by default and payment.) Why should Europe be able to fix its problem quickly?

The big difference seems to be that while the US moved to clean up the banking system quickly, Europe hasn't, or at least, hasn't done so in an overt way. Press reports suggest that everything is being propped up covertly until Sept. 2013 (!), the next German elections. After that, the German public can be treated like the US Tea Party, their government will take on lots of obligations that they hate.