A new financial crisis is brewing in Europe, one that will prove as devastating as the last economic crisis. This one will also be centered in southern Europe--only this time, instead of the sovereign debt of the region's governments, it will involve the commercial banking sector.
Most of the new loans will go to paying off Greece's debts.
For the past two weeks Greece has entered the climax of the Comedy of Errors - that is its six-year-old economic crisis. Banks have closed, referendums called, rallies and counter-rallies have been held, society divided and tales of conspiracies and Armageddon have become commonplace.
No responsible leader worthy of the title should take the risk of threatening the peace which has reigned since the end of the Second World War.
Unless the political and economic integration catches up, a sufficiently big crisis will inevitably rip up the Euro zone.
Here is a chart, courtesy of FXStreet.com, singing the sad song of the euro today. It measures the number of dollars a euro
"The euro is to blame for everything. Without it, there would be no need for budgetary rigor and growth would return." This is surely the most absurd argument to arise from the nationalist and populist parties campaigning for the European Parliament elections.
All great reforms must first mature. To be successful, they must be fully understood by society. This process requires time and a lot of explanations. However, the need to obtain the consent of the people must not deter the leaders from their mission, even if it makes them unpopular. As it is written in the American Federalist Papers: "When occasions present themselves, in which the interests of the people are at variance with their inclinations, it is the duty of the persons whom they have appointed to be the guardians of those interests, to withstand the temporary delusion, in order to give them time and opportunity for more cool and sedate reflection (Federalist Papers Nr. 71). What is called "populism" nowadays is not really tantamount to defending the real interests of the people. Rather, it is a political ruse, which consists of using ultra-simplified language that is easily understood by the people, playing on their sense of fear, to conquer power.
What distinguishes the two halves of Europe, argues political scientist Francis Fukuyama, is the presence, in the North, of a "political coalition protecting the autonomy of the bureaucracy." Here civil service is largely perceived as impartial and entrusted with providing continuity to policymaking. Governance failures in Southern Europe, on the other hand, are inextricably tied to more or less pervasive forms of clientelism, which buries merit and frustrates reforms.
In the run up to the European parliamentary elections next month, anti-Europe populists, such as Marine Le Pen's National Front in France, have been fanning the nationalist flames by telling voters that two leading left-of center Nobel laureates in economics -- Amartya Sen and Joe Stiglitz -- oppose a more united Europe.
Of all this week's international news -- the horrors in Kenya, Rouhani at the UN, the negotiations over Syria -- it is what some might call 'the boring German election' that will have the greatest long-term impact on the interests of the United States.
With little or no sign of growth in the euro zone, the European Central Bank is expected to cut interest rates to a record
A source familiar with IMF thinking said a loan write-off once Greece has fulfilled its adjustment programme would be the
By Jan Strupczewski BRUSSELS, Oct 24 (Reuters) - Euro zone government debt rose to 90 percent of the single currency area's