I’ll put a few of these under the fold…Karl Smith writes:
…the worse case endgame for a Euro failure is collapse of the global capitalist system, the political collapse of the West and the end of the Enlightenment. That’s fairly bad as things go and it could indeed happen.
I can imagine parts of eastern Europe or the Balkans going Fascist, but not Western Europe. The consequences of a euro collapse would be dire, but not nearly that dire. A few nice countries have nuclear weapons and battles over territory are no longer going to happen in that part of Europe. A cynic would add that fascism was also a part of the Enlightenment.
Ezra Klein writes:
…it [the morality play] only works if you think of the European debt crisis as a crisis of Greece, where the governance really was terrible, the economic institutions weak and the labor market coddled. It doesn’t work for Ireland. Or for Spain, which was running a budget surplus as recently as 2005. And is anyone in this conversation really pretending to have deep knowledge of the character of Portugal?
Germans will perceive a moral issue in guaranteeing the solvency of these countries, whether or not they think those countries have “done anything wrong.” My moral view is not exactly theirs (if I may generalize about various German views), but I hardly think such a German response is beyond the pale. You can believe “we are not obliged to bail out a country that won’t pay us back, and with whom we wrote a no bail-out agreement,” without believing “they are morally culpable.”
Matt Yglesias tweets:
If there’s a “reasonable probability” euro crisis will “crush the german economy” that’s a sufficient case for action
Not necessarily, not if the action raises risk and raises the badness of a bad outcome, which indeed it does. Have any of us actually done the decision analysis here? I don’t see it. Note also that Matt has been critical of Merkel in the past; now he is asking her to undertake a course of action which a bad politician would be incapable of seeing through. We will need maestros, and maestras, to get this one right.
Ryan Avent writes:
Sometimes a bank run is just a bank run, and a moralising approach that fails to stop it does nothing but harm millions of innocent bystanders. The desire to stick with the moralising approach may nonetheless prove attractive in Germany and elsewhere.
I think solvency problems are very much on the line here, and a perpetual guarantee of the debts of other economies is not a trivial no-brainer, morally or otherwise. It is doing much more than stopping a bank run, and once the guarantees are issued, through what credible mechanism can the plug ever be pulled on a country such as Italy, given the economic carnage which would result?
Reflecting on these responses in toto, I view these writers are wanting to make it a moral issue: “why can’t the mighty Germany simply solve this problem? What is wrong with them and their moral views?” I view these writers as reacting to my original post — written in multiple voices and with parentheses in the title I should stress — with a bit of mood affiliation. I view myself as trying to explain why moralizing perspectives miss the real difficulties in crafting a solution.