“How a Financial collapse Starts” writes Tyler Cowen in his November 15 post in Marginal Revolution.
As Irwin Stelzer notes in the Wall Street Journal:
“The shrinking of Greece's economy makes it likely that the inspectors now in Athens will report this week that Greece did not generate sufficient tax revenues to meet its deficit reduction targets. That will be grist for the mill of critics who are saying that the austerity program imposed on Greece by the IMF and the European Central Bank is the road to ruin, rather than to recovery.”
My comment: Remember the alleged virtue of the euro to shield member countries from the financial shocks that would ruin other non member ones? Remember a thing called "the stability pact" that Mr. Prodi famously but belatedly discovered to be a "stupidity"?And remember the so-called "no bailout condition" in the ECB charter? The conclusion: can you trust a monetary system that so consistently produced results completely contrary to its promises? Apparently the markets have some doubts.