I don’t usually write about finance on my blog but I couldn’t ignore the news from Greece as the eurozone, yet again, tried to avoid making any hard decisions.
It seems an appropriate time to revisit a blog post from Paul Mason back in November when he reminded us about the 30s.
A few months before he killed himself, the Austrian novelist Stefan Zweig wrote this, about the 1930s:
All the pale horses of the apocalypse have stormed through my life: revolution and famine, currency depreciation and terror, epidemics and emigration; I have seen great mass ideologies grow before my eyes and spread, fascism in Italy, national socialism in Germany, Bolshevism in Russia and above all the ultimate pestilence that has poisoned the flower of our European culture, nationalism in general.”
In his wonderful book, Lords of Finance: The Bankers Who Broke The World, the clearest and most well-written explanation of the mis-steps which led to Great Depression, Liaquat Ahamed also quotes Zweig: “It was an epoch of high ecstasy and ugly scheming, a singular mixture of unrest and fanaticism.”
Ahamed comes to the depressing conclusion :
The Great Depression was not some act of God or the result of some deep-rooted contradictions of capitalism but the direct results of a series of misjudgements by economic policy makers, some made back in the 1920s, others after the first crises set in – by any measure the most dramatic sequence of collective blunders ever made by finance officials.
The BBC’s Robert Peston does not have much confidence in the current crop of policy makers:
The eurozone ministers’ decision to postpone the definitive decision on a further 12bn euros of bridging loans for Greece is not likely to scare Greece’s austerity objectors into submission.
It could well persuade the Greek opponents of fiscal retrenchment that eurozone ministers are all talk and no trousers, that they are so disunited on how to fashion a fundamental solution to Greece’s excessive debts that Greece is better off taking direct control of its own economic destiny.
However, if this eurozone brinkmanship nudges the Greek parliament to reject the further budget squeeze, we’ll be closer than is remotely prudent or sensible to a 1930s-style financial and economic disaster.
No-one can say we weren’t warned – but even that may not be enough for the hapless eurozone to get its act together and take action.
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