Europe

The European crisis we have been witnessing from afar for the past three years is not an ordinary recession. It is not even an ordinary depression. In fact, it is not even an ordinary economic crisis.

Europeans may one day wake up in an environment of revived national rivalries, new political extremism and a continent without the open borders they once took for granted. This could be a tragedy even worse than the economic turmoil the continent is experiencing at the moment.

The tragedy of the European crisis is not that it was caused by striving for too much economic efficiency. The real tragedy is that it could have been predicted by public choice theory

Europe has run out of easy solutions to its many simultaneous crises. When it runs out of money to even buy itself more time to gloss over the symptoms of a dysfunctional monetary union, perhaps European leaders will finally start tackling the underlying problems. Time has become unaffordable

Capital markets are not loquacious storytellers. They condense the world into simple numbers. For this reason, the surge in Greek, Italian and Spanish bond yields could be mistaken for a mere technicality, a simple recalibration between the forces of demand and supply that happens in markets every day.

The core problem of Europe is not that its banks are fragile, its governments heavily indebted and its economy stagnant. The real problem is that Europe’s political leaders are still drawing the wrong conclusions from Europe’s many crises.

The attempt to make integration perfect has turned Europe into a disaster scene. Not even the Germans, with their inbuilt preference for tragedy over comedy, can be happy about this. And with their greatest ever humourist now gone, there is not much left to laugh about. For what lies ahead the Germans really need a sense of humour.

The treaty to establish the new European Stability Mechanism is the best example of this fundamentally undemocratic approach. Even its name is misleading.