The virtues of being slow and indecisive
In this FT story, some northern European leaders are sounding downright cocky about the Eurozone’s ability to weather a Greek default: One key reason for the increasing boldness in northern Europe is a growing belief the EU can contain the blowback from a disorderly default, having built up the eurozone’s financial “firewalls” against contagion. Some ...
In this FT story, some northern European leaders are sounding downright cocky about the Eurozone's ability to weather a Greek default:
In this FT story, some northern European leaders are sounding downright cocky about the Eurozone’s ability to weather a Greek default:
One key reason for the increasing boldness in northern Europe is a growing belief the EU can contain the blowback from a disorderly default, having built up the eurozone’s financial “firewalls” against contagion. Some officials also believe financial markets have priced in a default, meaning any adverse reaction will be limited.
Wolfgang Schäuble, the German finance minister, said on Monday the eurozone was “better prepared than two years ago” to deal with a default.
A day earlier, Philipp Roesler, the German economy minister, said such an outcome had “lost much of its horror.” Senior officials from the Netherlands and Luxembourg have made similar statements publicly in recent days.
They may be right; because of the temporizing measures of the EU and the IMF, the possibility of a Greek default has been hanging out there now for well over a year. Publics and institutions are likely as prepared as they can be. Back in April, I tried to argue that this "speed brake" function of multilateralism can be awfully important:
One of the most important–but largely unappreciated–services international organizations provide is to slow the pace of events. These institutions are often criticized for their tendency to temporize, find stop-gap solutions, and kick problems down the road. In some cases, they should be criticized for this habit; many crises demand speed and decisiveness. But often a speed brake is just what is called for…in the Greek case, the IMF and the EU probably won’t solve the underlying problem of Greek debt. But they may still be successful in mitigating the impact of an eventual Greek default and ensuring that it occurs in a more controlled manner than it would have otherwise. It’s not necessarily heroic stuff and the institutions probably won’t get much credit for it. But it’s the kind of service that helps keep crises from turning into cataclysms.
David Bosco is a professor at Indiana University’s Hamilton Lugar School of Global and International Studies. He is the author of The Poseidon Project: The Struggle to Govern the World’s Oceans. Twitter: @multilateralist
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