Huge story in the WSJ about how Europe almost caused another global collapse. The same could be said for the US Congress and the debt ceiling debate, which led to the downgrade and ugly August.

Regardless, the paragraphs below sets the tone, but what I really liked were the graphic novel illustrations that accompanied the piece. (click any of thesefior  larger versions).

All of which begs the question: When will we get a graphic noel about the EU crisis?

Here’s the Journal:

At a closed-door meeting in Washington on April 14, Europe’s effort to contain its debt crisis began to unravel. Inside the French ambassador’s 19-bedroom mansion, finance ministers and central bankers from the world’s largest economies heard Dominique Strauss-Kahn, then-head of the International Monetary Fund, deliver an ultimatum.

Greece, the country that triggered the euro-zone debt crisis, would need a much bigger bailout than planned, Mr. Strauss-Kahn said. Unless Europe coughed up extra cash, the IMF, which a year earlier had agreed to share the burden with European countries, wouldn’t release any more aid for Athens.

The warning prompted a split among the euro zone’s representatives over who should pay to save Greece from the biggest sovereign bankruptcy in history. European taxpayers alone? Or should the banks that had lent Greece too much during the global credit bubble also suffer? The IMF didn’t mind how Europe proceeded, as long as there was clarity by summer. “We need a decision,” said Mr. Strauss-Kahn.

It was to be Europe’s fateful spring. A Wall Street Journal investigation, based on more than two dozen interviews with euro-zone policy makers, revealed how the currency union floundered in indecision—failing to address either the immediate concerns of investors or the fundamental weaknesses undermining the euro. The consequence was that a crisis in a few small economies turned into a threat to the survival of Europe’s common currency and a menace to the global economy.

I suspect the key to the graphic novel is coming up with the appropriate super hero costume for each political figure . . .

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click for larger graphic

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Source:
Dithering at the Top Turned EU Crisis to Global Threat
CHARLES FORELLE and MARCUS WALKER
WSJ, DECEMBER 29, 2011
http://online.wsj.com/article/SB10001424052970203518404577094843835831390.html

Category: Bailouts, Credit, Politics

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8 Responses to “EU Crisis: The Graphic Novel Edition”

  1. Marc P says:

    The top graphic is a pretty good summary. The question was whether the bond investors, those folks who took the risk and would get the returns, would have to lose some of their investment. Trichet and others insisted that those who took the risk should not lose.

    We know why: the investors were banks, and those banks were teetering on insolvency. Some were quietly insolvent, zombie banks staggering along hoping to get enough of a handout from their governments to become healthy again.

    If banks didn’t have such high leverage then this wouldn’t be a problem. All investors take losses. If the world’s safest investments can sink a bank, then obviously these investors have a combination of far too much leverage and far too little capital.

    The solution is for the banks to raise capital and lower leverage, not for governments to print money and hand it to them. Obviously the banks prefer the latter, and 2011 has been nothing but kabuki theater to numb the public into not revolting when several hundred billion are transferred from the pubic to private hands.

  2. Raleighwood says:

    The foibles of Straus Kahn did add a bit of diversion to an unholy mess.

  3. dougc says:

    A rather simplistic interpretation of the european crisis.

  4. b_thunder says:

    “Greece… would need a much bigger bailout than planned, Mr. Strauss-Kahn said. Unless Europe coughed up extra cash, the IMF, which a year earlier had agreed to share the burden with European countries, wouldn’t release any more aid for Athens.”
    ‘“We need a decision,” said Mr. Strauss-Kahn.’

    The decision was to remove Mr. Strauss-Kahn from IMF and from politics.

  5. NeutralObserver says:

    “All of which begs the question: When will we get a graphic noel about the EU crisis?”

    Would you like that in the customary comic book version or as a coloring book? :-))

  6. GeorgeBurnsWasRight says:

    Thank God there’s no “dithering at the top” here in the good ole US of A.

  7. The Window Washer says:

    Altucher always wanted to be a comic book writer, give him a call and get to work on it. Maybe have the stand up economist team up with him. He already has a couple comics out.

  8. mathman says:

    This has been a strange year in a lot of ways:

    http://www.youtube.com/user/dutchsinse#p/u/0/PEL3YOy-FDo