"Euro armageddon is approaching, but it's too boring and complicated to explain"

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http://blogs.telegraph.co.uk/news/danielknowles/100113515/euro-armageddon-is-approaching-but-its-too-boring-and-complicated-to-explain/

Euro armageddon is approaching, but it's too boring and complicated to explain

By Daniel Knowles Politics Last updated: October 26th, 2011

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The European debt crisis, in Lego

There's a good reason no one makes disaster movies about financial crises. In disaster movies, there is always a solution which a crack team of miners/scientists/politicians can get to work on, just as soon as one boffin has explained it. The obstacles are horrendous, but they're simple (we have to get past that yeti, etc). The tension builds as the final battle approaches, and it then it arrives, easy to understand. And everyone knows when the battle is won: the enemy is defeated and the heroes share a laugh.

With the European financial crisis, it's the opposite: with every day that passes, it gets messier, more complicated, and, frankly, more boring. Instead of coming together to a logical conclusion, new subplots break out daily. Previously, it was relatively easy to explain: Greece is bankrupt and we don't know what to do about it. But then we bailed Greece out and it's still not over. Now it's something along the lines of: Greece is bankrupt, but then French and German banks own Greek debt, so they might be bankrupt too. Then Italy has lots of its own debt, which Germany would like it to pay off, just in case that markets start worrying that Italy is bankrupt too.

And that's before we even get into the the proposed solution (mostly it seems to be that Germany should throw money at everything, which the Germans understandably aren't too keen on). How big does the bailout fund need to be? Who pays for it? Who do we (well, the Germans) bail out: the Greeks, or the banks? Should the European Central Bank be allowed to buy government bonds? No one is sure of any of this. Not even the people whose job it is to understand it. Is it any surprise that one JP Morgan analyst got so frustrated he tried to explain it all with Lego?

The problem is that this applies to our politicians too. This afternoon, the leaders of 27 European countries will get together in a big room in Brussels, and they are expected to agree on a solution to a crisis so complicated that we don't even know who we can't agree to bail out any more. The coffee will taste bitter and they won't have slept much. Each has a different electorate, different newspaper headlines to wake up to and different political allies at home to appease. Few are economics specialists, or have the time to research this properly: they are all dependent on advisers, each of whom will say different, confusing things.

Unfortunately, we cannot expect successful solutions from a meeting like that. We will have a day of frantic speculation, reporting and comment today, and in all likelihood, tomorrow, everyone will emerge even more exhausted and no closer to agreeing on anything. The best we can hope for is enough to delay armageddon for a few more months. That will at least give us time to build more fall-out shelters.
Tags: debt crisis, EU armageddon, european debt crisis, fallout shelters.