One point that I was thinking about regarding this European crisis is this: What is the President of the US in addition to managing the affairs of the country also had to run the state of Michigan or some other state? This is in essence what I see happening in Europe as the leaders of Germany and France are having to do in order to try to keep together this European Union.
It just doesn't seem very efficient or logical.
- “Economic theory tells us that it is precisely the fickle nature of confidence, including its dependence on the public’s expectation of future events, which makes it so difficult to predict the timing of debt crises. High debt levels lead, in many mathematical economics models, to “multiple equilibria” in which the debt level might be sustained – or might not be. Economists do not have a terribly good idea of what kinds of events shift confidence and of how to concretely assess confidence vulnerability. What one does see, again and again, in the history of financial crises is that when an accident is waiting to happen, it eventually does. When countries become too deeply indebted, they are headed for trouble. When debt-fueled asset price explosions seem too good to be true, they probably are. But the exact timing can be very difficult to guess, and a crisis that seems imminent can sometimes take years to ignite.” – From This Time Is Different, by Carmen Reinhart and Ken Rogoff
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