Hair of the Dog

Opinion | Margaret Childs | December 2011 / January 2012

All over the news, we read how people are trying to capture "in a nutshell" what is really going on in Europe. While I doubt that there is any nutshell way of putting the situation, the attempts are impressive.

"Greece Will Save Europe," a Falter headline proclaims, or "If Greece left the Euro" suggests Die Presse. In Der Standard, a "Taskforce takes on Herculean Endeavour". Greece is getting us thinking and talking about what could happen, and what does happen, when inequality is what we share – the glue that keeps us together, but also the difference that could tear us apart.

Why had neoliberalism survived the crisis, virtually unscathed, wondered political columnist Robert Misik in the Falter of 25 Nov. All rational thought would suggest that the ideology that rode financial markets into the ground would have to give way to new streams of thought. More dominant than ever, that ideology is what keeps us believing in magical market activity. What about sovereign debt and responsibilities in a union, or in "united" states?

A Texas analyst made the astute observation that "Greece is not the tail that wags the dog, but rather the tail with fleas that makes the dog scratch like crazy."

Indeed, every financial market has been scratching lately.  The uncertainty has reached a point where 35% of German bonds went unsold at auction at the end of November.  Euro-zone problems had been viewed as confined to the so-called PIIGS countries, while Germany remained a relatively isolated bastion of stability that could provide EU bailouts.  Since last week downside risks for European credit, the Euro, and the European economy have now increased to levels at which losing sleep is completely justified.

But perhaps this scratching is what the EU has needed. After books like T.R. Reid’s The United States of Europe, EU leaders began basking in the creation they thought was – for lack of a better phrase – too big to fail. But as we have seen, anything that is too big to fail, is bound to be held up by governments who are too lazy to regulate.

Perhaps this ideology can be overcome, when we finally realise that there could be something that is, well, too big to bail out.


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