Any solution to Europes economic woes that does not involve large-scale debt forgiveness is doomed to failureThe eurozone debt crisis never went away. It merely acquired a misleading veneer of resolution, thanks to grand promises, political chest-thumping and frazzled financial markets that were desperate to believe in happily ever after.Today, there is an accentuated sense of deja vu (all over again, as Yogi Berra would concur). Europe faces the spectre of deflation. Some members, such as Italy, have toppled over the edge for the first time in more than half a century; Germany threatens recession; France is a basket case. Wages are in decline across club Med: real hourly wages in Greece, Spain and Ireland recently fell for the fourth year in succession. Meanwhile, bank lending is an aspiration and Banco Espirito Santo is an ugly reminder of the iceberg of bad debts lurking. Good Europeans are in decline while populism, nationalism and jingoism are les belles du jour. Continue reading...
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