This is written just before the EU Summit on Friday the 29th. The betting remains on “too little too late” as the outcome. Today, Angela Merkel and French President Francois Hollande will meet to see if they can find common ground. But before the meetings, Ms. Merkel has stated her objections to a “grand deal” to place on the table the institutions and resources to put the crisis to rest.
But there are other dynamics at work that may in time force a systemic and credible European-wide response. One dynamic is the nasty market and the forces betting on both bringing down the Euro and gaining profit from outrageous interest rates and derivative betting. The other force, and the most important, is the utter disaster that their austerity policies have brought upon their people. Those who have been hurt are rising up and have already defeated a conservative French President who played with the rich and used racist imagery in his election instead of addressing the needs of the majority of his citizens not comprising the 1% of his nation.
But also at work is the growing realization throughout European society (and we hope American as well), that austerity was the wrong direction. As almost every good economist has cried from the rooftops, stimulus and growth and directly addressing unemployment have to be at the top priority of society. Today, Paul Krugman and Richard Layard (from Princeton and the London School of Economics) have an op-ed in the Financial Times with the headline: “A Manifesto for Economic Sense.” They have asked all who see their plain good sense economic argument to rally to the manifesto they have proposed. I urge all to read this article and ponder its clear call to stop the massive suffering being imposed on the people.
The vitality, prosperity, and security of Europe, the United States and the globe depend on leaders who, at last, will recognize the cliff of depression we are approaching and will radically change their direction.