Despite the best efforts of central banks from New York to Tokyo to flood the European Union with funds enough to stave off a full on credit crunch, there is still a fear that the European powers that be have little more than a few days to produce a substantial plan to move things in the right direction before things start collapsing. Seven days by some accounts, nine by others. The wave approaches and it appears that not enough has been done to batten down the hatches. Will the banks have enough money to avoid a crunch? Will some level of confidence in Italy be restored in time to avoid further damage? Will EuroBonds take hold? Is there anything the ECB can do? Will this result in a more integrated Europe or will it leave the dream of a community in shambles? Why does this matter to anyone who lives beyond the European Community?
As usual, the New York Times does a pretty bang up job of explaining the complexities of the Euro crisis and wider risk of collapse, breaking it down for American audiences not clued into what’s going on over here but probably should be as:
The bottom line is simple: Europe’s problems are a lot like ours, only worse. Like Wall Street, Germany is where the money is. Italy, like California, has let bad governance squander great natural resources. Greece is like a much older version of Mississippi — forever poor and living a bit too much off its richer neighbors. Slovenia, Slovakia and Estonia are like the heartland states that learned the hard way how entwined so-called Main Street is with Wall Street. Now remember that these countries share neither a government nor a language. Nor a realistic bailout plan, either.
The summary goes on to explore just what could and might happen should one, two or all countries collapse out from the Euro, detailing the impact it would have on US markets and beyond. Its not pretty but its worth knowing what may be coming as opposed to being surprised as the wave knocks you down from behind.
Image: ECB President, Mario Drahgi, From El Pais