In the midst of the Euro crises, I was seething. Brushing up on debt ratios, reading blogs decrying the PIIGS (Portugual, Ireland, Italy, Greece and Spain) and their wasteful ways, watching the Euro drop daily against the dollar and pound while some people, mostly in the UK and the US insterstingly enough, clamored for the dissolution of the EU itself. This stuff was not fun research. I kept telling myself, this has to stop, this cannot go on, it makes no sense. At the time few others seemed to feel that way and I was really starting to second guess myself.

But I could not shake the feeling that things were way out of line. I kept thinking of the movie ‘Wall Street’ where Hal Holbrook tells Charley Sheen “Stick to the fundamentals kid”. See, I looked at the fundamentals, over and over again during the Euro Crises and people dumping Euros to rush to Pounds and Dollars made little sense. Greece’s debt crises was paltry, negligible, a mosquito on the arm compared to the debt of the UK or the granddaddy of all debt in human history, that of the United States. Greece comprised 2% of the EU’s GDP, the EU having eclipsed the US some years ago as the largest economy in the world, should have indicated that the EU could absorb the problem. In addition France and Germany, the big ballers of the EU were already out of the recession, posting modest growth and globally, international trade was on the upswing. Greece was struggling but the Eurozone itself was actually coming out of the Great Recession. Why should the currency and the bound economic policies get scrapped when the evidence clearly showed that they were in fact working?

A tremendous amount of ink has been spilled about the Euro Crisis by far more learned persons than I. Nevertheless, nothing I read anywhere during the crises ever said ‘This is illogical and not sustainable, Europe cannot collapse because of Greece’. No one refuted the stupidity of the ‘domino theory’, that markets punishing Greek debt would then move to jacking up bond rates on Italy, Spain and Ireland to the point where they caused massive default and brought down the whole Euro system. No one stood up and said the ‘wisdom of the market is foolishness.’

The only person I know of, who said any of these things, was me.

The Euro crisis is most definitely over by the way. Look at currency trading over the last 3 months if you need proof. It is time for the post mortems to begin. Doubtless most will talk about the Trillion Euro safety net, the IMF Greece deal and the draconian (but not nearly draconian enough) curbs on speculators and the grousing (but not regulating, sadly) of gargantuan hedge funds that can literally pull the world financial markets in their direction. All of these things are important and most, if not all of them were very necessary. I realize quite clearly that if the EU governments chose to take no action, and let the market hysteria have its way, that certainly that would have led to a disaster. But my question today is, will those writing the post mortem look back and say ‘When the governments of the EU intervened in financial activities directly why did it work so quickly and more importantly, so effectively?’

The IMF deal was announced on May 2 and as of this writing it is July 3rd, so two months have gone by. The news on May 2nd was ‘would the deal be enough, will the markets approve of this as sufficient’, and of course most writing about it were betting no.

Today, the indicators demonstrate that things are very different than two months ago. Europe instituted Austerity (variously sized spending cuts and tax hikes) not just among the PIIGS but almost the entire continent, even in Germany the strongest of the strong. Shortly thereafter, the UK followed the European example of slashing government expenses but on a massively larger scale to combat their massively larger debt. The US of course did not and continues to suffer under a gianormous debt load, dismal job reports, flagging consumer confidence, the beginning of a double dip recession and meanwhile Wall Street, is again riding high creating the need for Financial reform currently being debated in the US Congress. On the flip side, many European countries, particularly Germany are experiencing even more robust growth and the Euro is not only stable; it is once again rising against the flaccid dollar and even the pound.

See, the Euro Crisis was a blip, some are now calling it a ‘correction’ asserting that the Euro was overvalued and needed to be brought in line and that is why the shoring up and budget cuts worked so well. In short, it seems that the panic actually was overrated.

Remember, the Great Recession was not caused by the Euro Crisis; it was caused by the immense implosion of financial and housing markets in the US, the massive debt load in Iceland and the naked exposure of many of the UK’s banks which found themselves either failing outright or in desperate need of saving. The Euro Crisis was merely a chapter in the sad tale of the Great Recession, and the solution of Austerity is another chapter but the book itself is so very much larger than these two chapters.

Looking back on the Euro Crises, the whole thing, from start to finish lasted little more than two months, from late April to late June. Now, interestingly enough, there is concern that the cure for the Euro Crisis is somehow causing harm, not to the EU, but to those around the EU like the US, the UK and even Russia. See, Europe’s austerity, which effectively killed the attacks on its currency, is now being blamed by American Economists for leading the US and other nations into a double dip recession in addition to promting the UK to gut itself. In particular, Germany is being criticized by the US for exporting too much and not consuming enough and for leading the Austerity charge out of Greece and into Europe at large. This latest chapter in the Great Recession promises to be just as delusional as the ones before it, again pointing the finger not at the problems themselves but some other convenient target. It reminds me of another movie quote this time from the movie ‘The Insider’ where Phillip B. Halls tells Al Pacino “Face it, you fucked us”
and Pacino replies
“No, YOU fucked You, don’t get things inverted…”