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Euro Crisis: Only Root-And-Branch Financial Reform Can Tame The Wolf Pack
European optimists hope the way to save the eurozone will be to complete the project by agreeing much closer fiscal and political union between the single currency members. In future, the hope is Germany would no more allow Greece to get into this mess than it would Bavaria.
Yet recognising how interconnected our economies have become does not in itself lessen the risks. In many respects, the credit crunch which began in 2007 has just jumped another firebreak: what began as a private sector banking problem has mutated into a sovereign debt disaster as nation states try to help, and is now becoming a supranational headache instead as the few remaining stable authorities, such as the EU and International Monetary Fund, get dragged in too.
Understandably, many are now again questioning the role that banks and traders have played in this saga – not least as a government-spurred recovery in bank profits once again drives personal bonuses to record levels.
In Europe, anger at the financial system is directed particularly towards London and New York, where most of the world's currency traders and debt investors hang out. The EU is already working on plans to form its own credit rating agencies as an answer to what many see as an American hegemony....
Satisfying, and just, as it may be to turn fire back on the financiers, the complicating factor is that indebted countries have never needed them more. Perhaps only a root-and-branch reassessment of our financial system itself can save us now. Read more.