THE WALL STREET JOURNAL: "The party's over. It's time to call it a day. They've burst your pretty balloon, and taken the moon away."
So wrote Betty Comden and Adolph Green over fifty years ago, when they couldn't possibly have realized they were creating a lyric that would some day describe the euro zone.
No need retelling the well-reported slide of Greece into what will likely be an eventual default. Or the trials and tribulations of the euro zone's other periphery countries. What is worth noting is that it is one thing for healthy nations to be the unfortunate victims of "contagion," quite another for them to pick up the infection by embracing the diseased country.
Which is what euro-zone countries have done.
They have in effect welcomed the disease-weakened balance sheets of Greece and other countries onto their until-now healthy, stronger balance sheets, wiping out decades of good, prudent living in the case of Germany, and calling attention to thirty years of deficits, in the case of France.
Worse still, the spread of the fiscal disease is not confined to the euro zone, which it can be said by the querulous should have seen it coming. Britain, with a fiscal deficit of Grecian proportions—12% of GDP—and the U.S., in similar circumstances, find themselves not immune to the disease.
The rating agencies are increasingly nervous about leaving unchanged the triple-A ratings of the U.K. and the U.S. And the Obama administration is sufficiently fearful of the effect on America's recovery of the euro zone's problems, that the president called Spanish president José Luis Rodriguez Zapatero to urge him to take "resolute action" to get Spain's fiscal house in order—rather like the pot calling the kettle black, since the president has shown no inclination to cut his own spending programs, even thought the government's debt is headed to 110% of GRP by 2015, compared with 90% at the end of World War II. >>> Irwin Stelzer | Sunday, May 16, 2010
