I had never really understood the complex issues at play when considering the euro and a multinational currency, but Ambrose Evans-Pritchard sums it up here in a neat little parcel when discussing the International Monetary Fund’s complacency and ignorance towards issues:
“At root was a failure to grasp the elemental point that currency unions with no treasury or political union to back them up are inherently vulnerable to debt crises. States facing a shock no longer have sovereign tools to defend themselves. Devaluation risk is switched into bankruptcy risk.”
However the most striking aspect of this whole fiasco is the utter idiocy and complacency of European institutions, Governments and Banks. The more we learn about practices and ideologies pre-economic crisis the more the phrase living in a bubble springs to mind. One commenter on facebook described the IMF’s attitude as “funny if it weren’t so tragic” and it’s true. It’s one of those funny ones where you’re not sure whether you should laugh or cry, like throwing up on a vicar or someone spitting on your shoes.
But what strikes me the most is that the discoveries we are now making about pre-economic crisis ideologies and attitudes are so dire, are so unbelievably shambolic that even The Telegraph, who’s journalists probably enjoy lavish cocktail parties and water polonium tournaments with these people, are even sticking their head out to bark at the “‘confidence fairy'” culture of Europe pre-economic crisis.