Here comes the rain again
Raining in my head like a tragedy
Tearing me apart like a new emotion
--Eurythmics
We spent the better part of 2007-2008 listening to bureaucrats claiming that debt blowups were isolated and contained. Little or no chance of a contagion, we heard.
The cascade then commenced.
Similar rhetoric is now building around the Europe story.
Of course, what choice do officials have? When you have a debt laden economic system that is levered many times, the only thing holding things together is confidence. If people become suspicious of the system's validity and simultaneously head for the exits en masse, then the game is up and the house of cards folds.
There will likely come a point, perhaps soon, where no amount of rhetoric will constrain market forces seeking to rebalance the system.
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