The Euro Outlook

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Looks like Greece is now bailing (using the fig leaf of a referendum) from the Euro rescue plan that even had it been implemented wouldn’t really have solved the problem. This gets at what I think is the fundamental reason the outlook for the currency union is bleak.

The problems here are solvable. But there are a few different ways the problems could be solved. Each way is worse for some people than some other ways would be. And Europe’s decision-making mechanism is very clunky. So at all times, things are likely to get done only at the last minute if at all. Which means any realistic path to a solution will involve multiple rounds of decision-making, as one crisis after the other is staved off. Which is fine. At any given moment “consensus emerges at the last minute to alleviate the crisis” is more likely than the alternative. But there are so many iterations this whole thing will go through and so many different steps at which it could go wrong that the overall odds for success don’t seem really great to me.