Thursday, December 30, 2010

Financial and moral bankruptcy

In the New York Times Economix blog, Simon Johnson glummly assesses Europe's financial prospects over the next few months as countries reach deadlines to roll over their debts.

He outlines some painful steps for the European Union, including greater fiscal integration, more intervention by the European Central Bank in core countries, but a casting off of some weaker countries. Although the steps are painful, Johnson concludes that
At the end of the day, the Europeans will save themselves, with the measures outlined above, only because there will be no other way to avoid wasting 60 years of political unification.
Although the U.S. faces some similar pressures, Johnson is less sanguine about our ability to solve our problems.
Our leading bankers looted the state, plunged the world into deep recession and cost the United States eight million jobs. Now many of them stand by with sharpened knives and enhanced bonuses – willing to suggest how the salaries and jobs of others can be further cut. Consider the morality of that.

Will no one think hard about what this means for our budget and our political system until it is too late?