“What’s more, the components of a solution to the immediate euro-zone crisis, long proposed by this newspaper, are fairly well understood. First, create a firewall around other euro-zone members like Italy and Spain that are solvent but need help financing their debts; second, recapitalise the European banking system, which has done far less since 2008 to fortify its defences than America’s; and third, allow Greece, self-evidently insolvent, to default in an orderly fashion.
The problem with this solution for the rest of the world is that it depends on the Europeans to carry it out. The debt crisis has been running for 18 months now, and the only way that euro-zone leaders have dazzled is through sheer incompetence. It continued this week, with some politicians admitting that a hard restructuring of Greek debt was on the table, whilst others ruled out a default. The result is the worst of all worlds: more uncertainty for banks that hold Greek debt, more pointless austerity for the battered Greek economy”.