Friday, January 23, 2009

Running repairs

VoxEU describes the international economic strains in the Euro area and the need to patch up the collective fuselage so it can continue flying. I'm not an expert, but it looks like a mess to me.

Pic: "A rocket fired by an enemy fighter inflicted this damage on The Sack, a B-17 of the 379th Group. A 14-inch fragment of the rocket tore the pants off of the turret gunner without hurting him."


Anonymous said...

Interesting article. One interesting point it raises is that money is now flowing out of many EU countries. However, currently it is not so easy for labour to follow the money. My guess is that there will be massive migration. German and Scandinavian investors into the Baltic states will pull back their investment to their own countries, and the Latvians et al will eventually click on to this, make full use of Schengen and migrate to Germany and Scandinavia to "follow the money". No doubt working in black-market Germany will be better than staying in a collapsing Latvia. If the Germans do indeed find themselves awash with desparate Latvians, how will they react? Badly, history suggests.

This puts pressure on the EU to act to resolve the economic crisis to avoid civil war. But can it? Laban Tall points out that Ireland cannot print money to write off its debts and save it from bankruptcy in the way that the UK can. Printing money is not a panacea, but it is favoured over the chronic deflation that Ireland faces. However, printing more Euros to save Ireland would be vehemently opposed by Germany. The Irish can take the traditional route of escape to the UK, but what of the Baltic states? Catch 22.

Sackerson said...

An unholy mess. Some have said for years that the EU would pull itself apart because the different economies are moving in different directions.

Paddington said...

The picture that you show reminds me of the story from WWII on flak damage to planes. Returning planes were examined, and the areas of damage reinforced in the entire fleet. It took a while for someone to figure out that they needed to reinforce the other parts of the planes, as these ones had still been good enough to return home.

Sackerson said...

Good point, P.