Tuesday, December 27, 2011

A Shared Fate: The Political Implications of the Eurozone Crisis

    Tuesday, December 27, 2011   No comments


Jan-Werner Müller

Paul Krugman recently wondered whether it was possible to be “both terrified and bored” by the Eurozone crisis. It is indeed terrifying: the EU—the most important political innovation since the invention of the democratic welfare state—might break apart, or worse. Some are predicting the return of large-scale political violence; protesters on the streets of Athens are already comparing Greece, 2011 to Dachau, 1933. But the crisis is also boring, in that a sad pattern has predictably been repeating itself: markets jitter; politicians declare a make-or-break moment; national leaders host an all-night summit; bleary-eyed, they declare the crisis’s final resolution; the market-confidence fairy makes a brief appearance; and then the cycle starts all over again.
By now most people have settled on one of two economic solutions: either let the European Central Bank act as lender of last resort and issue Eurobonds (everyone’s view, it seems, except the German government’s) or impose discipline so as to avoid inflation and a permanent Southern European Mezzogiorno (the official German view).

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