WHO’S TO BLAME FOR THE EUROPEAN DEBT CRISIS
- SEPTEMBER 20, 2011, 7:05 P.M. ET
Notable Quotable
Charles Kadlec on who’s to blame for the European debt crisis.
- Columnist Charles Kadlec writing Sept. 19 at Forbes.com:
There is no one to blame for Europe’s debt crisis other than its political class. They are the ones who borrowed extravagantly with the pretense that good intentions trumped fiscal responsibility, who set the rules that require banks to hold zero capital against government debt, and who permitted the European Central Bank to buy billions of euros of that debt from banks. That has endangered the euro itself, which has fallen 20% against gold since the beginning of the year, signaling that higher inflation and increased economic turmoil in the euro-zone may lie ahead.
In the absence of the next, 8 billion euro loan from its European partners and the IMF, the Greek government will soon simply run out of money to pay public sector wages and pensions. That reality last week triggered a run by dollar depositors on European banks with exposure to government debt prompting the U.S. Federal Reserve to make emergency loans to the European Central bank so it, in turn, could provide dollar liquidity to its member banks.
There appears to be no way out
