Tag Archives: Ireland

Europe without Greece is like Main Street without Wall Street. Difficult to fathom, even if Goldman, Sachs & Co. has been naughty. For now, Greece can stay; but it skittered perilously close to getting voted off the Continent, mostly by Germany, which seems to control the votes. There’s a tangle of macroeconomics that makes relations between Greece and Germany fraught (including the threat of infecting Portugal, Spain, Ireland, the U.K.) and the euro-zone situation dire. The crisis is exacerbated by Europe’s uneven evolution, which remains more an economic than political construct, as if the United States consulted the Constitution for economic matters and the Articles of Confederation for politics. That said, the nub of the dispute comes down to matters no treaties, directives or decrees can bury: history, tradition, emotion, perception. In the end, Germany can’t understand why Greeks aren’t, well, German (Greeks disagree): orderly, tax paying, thrifty, export-oriented, resistant to inflationary temptations. And, even stranger, German intellectual tradition has long had deep affinities with the Greeks — unfortunately, the Greece of Pericles and Plato, not Papandreou and his minions. It’s like some alien race dropped into Greece, with a weakness for deficit spending and creative accounting.

How will this end? Who knows. Even if you succeed in comprehending Europe’s deepening economic woes (good luck), it’s devilishly more difficult to track deeper emotional currents of a Europe that, socially and culturally, has resisted amalgamation in Brussels’ technocratic melting pot. This raises an issue exposed by the financial crisis: the shaky apotheosis of economics or economic thinking. The crisis left the efficient-market hypothesis, with its engine of rational expectations, less a universal explanation for economic behavior (meaning, ipso facto, any behavior) and more, at best, a tendency. Bailouts and backlashes provoked panic, then frenzy, behavior the theory once defined out of existence. That, in turn, ushered in a remarkable conclusion: folks act for many reasons, rational, irrational, hinged, unhinged. Individuals, groups, societies are not necessarily consistent, logical, informed or coherent. They can, for instance, demand bankers lend while pelting them with rotten fruit. They can admire Greece but not Greeks. They can engage in bouts of world domination led by madmen.

More… Continue reading →