If you’ve been watching the news and the slow-moving-train wreck of the European Union, I sit here and wonder how and why smart people are doing dumb things with the world economy. If and when the Euro does go down, imagine the costs of currency switching in all those EU countries. Not only is that going to be a drain on each of those economies, it will also dampen an already weak world economy. This is going to hurt the US. What’s worse is that the US economy is in such bad shape as it is, I’m not sure how much more it can take.
This is particularly bad new for Obama, as no matter what, this is his economy, and if things get worse, he’ll really be certain of a single term.
If there is any silver lining in all of this, we will be able to look back on how the EU painted themselves into a corner where some countries (Greece, Italy and Spain) couldn’t operate within the narrow financial constraints that the EU imposed on them. If things do fall apart, I hope that painful lesson only has to be felt once.
At any rate - here’s some good reading on the crisis (IMO):
- The Economist
- Paul Krugman has been talking about this potential breakup for a while, and it’s been really interesting to watch. Just search for ‘euro’ on his blog.
The other sad point in all this (to me) is that politicians are more stubborn in the US, and while we don’t have the same kinds of issues as the EU, we’re still in a heavily under-performing economy. Our politicians (many of them) are certain that the only way out is less spending and more austerity. It’s like there’s no lesson learned from the Depression or Japan of the 90’s…