Watching the car crash...
Krugman and two commenters on the coming euro-disaster:
Every even halfway plausible route to euro salvation now depends on a radical change in policy by the European Central Bank. Yet as John Quiggin says in today’s Times, the ECB has instead been part of the problem.commenter 1:
I believe that the ECB rate hike earlier this year will go down in history as a classic example of policy idiocy. We would probably still be in this mess even if the ECB hadn’t raised rates, but the sheer stupidity of obsessing over inflation when the euro was obviously at risk boggles the mind.
I still find it hard to believe that the euro will fail; but it seems equally hard to believe that Europe will do what’s needed to avoid that failure. Irresistible force, meet immovable object — and watch the explosion.
Watching the Eurozone come apart at the seams is akin to watching a car accident about to happen when everything suddenly moves in slow motion. Apparently, the ECB - spurred on and cheered by Germany and Angela Merkel - is content with the proposition that having Europe collapse - and the global economy with it - is better than allowing inflation to creep up from an effectively negative rate to, oh, say 1.5% or 2%. Better a zillion people out of work than for the ECB to buy soverign debt and stop all the coming catastrophe.
When you try to make economics a morality play, tears ensue. Reality is unmoved.