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Remember That There Is a Very Simple Solution to Europe's Current Financial Crisis?

Duncan Black:

Eschaton: Do I Hear 80%?: It isn't totally my preferred solution, but we should remember that the crisis and problems are fake, that there is a simple solution. Cancel Greece's debts and have the ECB give free money to the banks.

BRUSSELS — Eurozone finance ministers said Saturday that they have agreed that banks should accept substantially bigger losses on their Greek bonds, with a new report suggesting that writedowns of up to 60 percent may be necessary.

Alternatively, poor and middle class people can continue to suffer as Greece's economy is destroyed. Rich people across the world agree that the solution to every problem is more suffering for poor people.

And Paul Krugman:

There's A Hole In The Bucket: [A]t this point the urgent need is for a big Panzerfaust — a bailout fund big enough to head off a self-fulfilling liquidity crisis for Italy. But such a fund would be backed by the credit of the euro area’s remaining AAA governments, basically Germany and France — yet at this point the euro situation has deteriorated sufficiently that taking on another commitment would undermine French credit. There’s a hole in the bucket, and every attempt to fix that hole ends up being stymied because, well, there’s a hole in the bucket.

The answer to the whole conundrum is to back the rescue, not with French guarantees, but with the power of the printing press — to put the ECB behind the effort. But the ECB won’t and maybe can’t (under current rules) do that.

And meanwhile, austerity programs are leading to severe slumps in Greece and elsewhere. Who could have imagined that?

What a tragedy. A rich, productive continent, which has produced arguably the most decent societies in human history, is tearing itself apart because its elite insisted on embarking on a dubious monetary project, and now can’t bring itself to take the steps necessary to give that project a chance of working.