There are clearly several levels to the catastrophic chain of events which began with the sub-prime crash in 2008, the banking failures, the companies bankruptcies, the "bear" stock markets, the currency crisis and now the defaulting countries. There is an international crisis of the deregulated markets, obviously. It was not sop much a failure of capitalism, as was written by some leftist journalists, but a perversion of its mechanisms. Capitalism is a system which can be extremely efficient if two factors are present: a high level of information of the economic agents and a very low level of competition distortion. The global level of the crisis came precisely from a complete absence of both these factors. Agents began trading products where they had no visibility at all, or even where they were purposefully and massively misled. In other words, there was a massive fraud scam going on at the global level. But instead of compensating the lack of (government) regulation by an increased competition, these agents (banks, funds, traders, insurance companies and notation agencies) cooperated and colluded to avoid their individual demise. This led to their failure en masse and the need for the governments to rescue several of them (or their victims) with taxpayer money. Here already, we see that the origin of the crisis was one of fraud, essentially, a criminal enterprise, with economic consequences and all too human victims.
Unlike these countries, the Greek government had consistently lied about it. The previous PASOK government had lied about its budget deficit before the country adhesion to the Eurozone, the Nea Democratia government kept lying about it after it came to power. To the credit of the current PASOK government, it disclosed the extent of the countries woes when it came to power in 2009. Unfortunately, it was already too late for any realistic local salvage plan. Greece has a poorly efficient public sector, an incredibly expensive military (second only to the USA in terms of budget to GDP ratio and first in NATO in terms of enlisted men and women in the army). It has way too many nationalized companies and not enough free competition. Its fiscal efficiency is poor, to say the least, with the richest people paying too little taxes (or evading them all together). Last but not least, the Church weighs enormously in political affairs without contributing to the economy.
A regional or international solution had to be found. Because of its membership in the European Union and its participation in the Euro single currency, the Greek problem quickly became a European problem. The Greek debt was a Euro debt and its crisis, by weakening the Euro, soon threatened to spread like a contagious disease. Namely, other European countries with the same currency and similar budget issues could face the same reluctance from lenders to give them any credit. And there lies precisely my point. Notation agencies and international banks did treat (to a certain extent) Europe as a apart entity. With some reason, they calculated that the European countries could not ignore the Greek issue (or the similar Portuguese and Irish ones). European banks had lent vast amounts to Greece, and so had sovereign entities. A Greek default would weaken or even threaten them. By their assessments and notations, they clearly sent the message that they expected a regional answer to a potentially regional problem. Although they had themselves some responsibility in the problem (contributing to aggravate it), it can not be denied that they had a point. Greece and the other European Union member states are linked by several treaties and by their common institutions. They share a money and their economies, via the common market are integrated in a very extensive way.
Yet, it is not so much an economic answer that these lenders wanted to see. It was a political one. In petto, this was a test of political will, of institutional resilience and (for some) of statesmanship. And it is, I think, stating the obvious again to write that this test was lamentably failed. While some, like Jean-Claude Juncker or Jean-Claude Trichet, did raise to meet the challenge where and when they could, most of the "usual suspects" showed a total lack of political sense. Nicolas Sarkozy and Angela Merkel, but also for instance the Slovakian and Finish leaders (Iveta Radicova and Jyriki Katainen respectively), did not rise to show European leadership. They cringed and cowered on national issues, nationalistic ones even. Europe, as an idea as well as an institutional construction, is based on solidarity. Until 2008, it never had to face any substantial crisis. The Cold War never turned hot. The fall of the Berlin wall was more an opportunity than a crisis. The Bush led "War on Terror" (tm) always was an American thing, even if the Labour UK government demonstrated high levels of servility in it. None of these issues was a true crisis, because none of them threatened the livelihood of the European citizens. Even the defeat of the European constitutional referendum was mostly a technocratic issue. While citizens were consulted and generally rebelled against it, it did not affect them enough to even take the pain of trying to understand it or vote for anything else than local political reflex.
But nowadays, the crisis is well there. The refusal from international lenders to give sustainable interest rates to Greece and now other EU countries is actually threatening the life of millions of European citizens. And yet, the European answer has oscillated between hesitations and chauvinism. Europe, understood as a collective of member-states, has spectacularly failed the first serious test that was presented to it. Even if Greece is saved (and it will, sooner or later, but at which cost?), the current European institutional "house" is dying. It is dying from the poison that its own lack of solidarity is producing.
It might take a while, but the lessons of this bitter event have to be taken. The faster the better. It is not realistic to expect a vague coalition of member-states to present anything structured in answer to a regional or international crisis. It is not realistic to expect a lone country to play the role of scapegoat for the failures of international organisations, even if this country's government clearly dug its own grave. It is even less realistic to expect citizens to stay still or even to have a rational answer to all this. It might be time to build actual institutions to give Europe the political reactivity that its economic sheer mass requires. We can't continue to have such a massive truck with so many drivers and so little direction. Europe needs political leadership supported by democratic legitimacy and it needs it now. It is not time for less Europe, it is time for a stronger and faster one. Now is the time...
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