Europe in Turmoil – Greece and Italy Close to Selecting New Leaders

blr-editor | November 10, 2011 | Comments (0)

Can Sarkozy and Merkel Save the Eurozone?

As the Eurozone crisis drags on, I have become more pessimistic about Europe making anything like a robust recovery or early emergence from it. It strikes me that one of the major problems of the Eurozone is the sclerotic, slow-motion decision making.

Making significant decisions in the EU throughout this ongoing financial saga has been slowed by the need to achieve consensus by the 17-odd countries that make up the Eurozone. By the time they cobble together a decision, the markets have moved on and a new crisis has erupted.

Today, Greece and Italy are close to naming new leaders. Reuters reports:

After five days of chaotic haggling, former European Central Bank vice-president Lucas Papademos was appointed to head an interim crisis cabinet charged with saving Greece from default, bankruptcy and an exit from the euro zone.

In Rome, former European Commissioner Mario Monti emerged as favorite to replace Italian Prime Minister Silvio Berlusconi within days and lead an emergency government that would implement long delayed reforms of pensions, labor markets and business regulation.

The core issue for the Europeans was an abysmal lack of foresight and tendency to live in a fiscal dreamland, continuing to expect emerging markets to subsidize their cozy standard of living, bloated bureaucracies, and early retirements forever.

Currently, the United States has escaped from the worst of the Greek tragedy engulfing Europe, but with our own outsize deficits and a debt now past 100% of GDP, America’s day of reckoning will not be too far off.

When that day comes, we will blame everyone but ourselves. If ever we all needed to be fiscally responsible (on an individual basis, since the political class is hopelessly deadlocked), that time is now.

Take a good look at Europe. That could easily be the US in another year or two if we do not change.