The EU commission president has identified the reason for the euro’s crisis:
The opening day of the G20 summit was threatening to deteriorate into a fractious row between eurozone countries and other non-European members of the G20, notably the US, as EU commission president José Manuel Barroso insisted the origins of the eurozone crisis lay in the unorthodox policies of American capitalism.
As Europe’s leaders came under intense pressure to act decisively to cure the euro’s ills, and a campaign gathered pace to relax some of the austerity programmes laying waste to countries with unsustainable debt levels, Barroso said Europe had not come to the G20 summit in Mexico to receive lessons on how to handle the economy. Asked by a Canadian journalist: “Why should North Americans risk their assets to help Europe?” he replied: “Frankly, we are not here to receive lessons in terms of democracy or in terms of how to handle the economy.
“This crisis was not originated in Europe … seeing as you mention North America, this crisis originated in North America and much of our financial sector was contaminated by, how can I put it, unorthodox practices, from some sectors of the financial market.”
Since Canada has not experienced the crisis in its financial sector seen here and in Europe and its financial sector is relatively tiny anyway, he is unquestionably blaming the United States for the euro’s woes and tarring Canada with the same brush. Left unmentioned by Mr. Barroso are how the greed of U. S. bankers forced French and German banks to make excessive loans to Ireland, Portugal, and Greece, how it forced Ireland, Portugal, and Greece to borrow, how it created housing bubbles in Ireland and Spain, how it forced Germany to run permanent trade surpluses with Greece and Greece to run permanent trade deficits with Germany or how that bilateral trade situation could be continued without German banks lending to Greece to keep the balls in the air.
Also left unmentioned is how precisely the crisis the euro faces could have been widely predicted as it was at its inception.
Far be it from me to defend the heads of the big U. S. banks. I think that in a just system most of them should be in the jug from violations of Sarbanes-Oxley at the very least. But, if there is any truth in the idea that the road to recovery begins with acknowledging that you have a problem, searching for a solution to the euro’s problems may be premature.