Analistas 27/06/2016

Europe’s troubles shift northward

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The other narrative, however, favored by Berlin and Brussels, sees the euro crisis as the wages of sin. According to this narrative, Southern European countries behaved irresponsibly, and now they’re paying the price. What these nations need to do is institute a reign of virtue, of fiscal responsibility and structural reform, and all will be well.

So it’s important to note that the eurozone’s locus of trouble is moving from the south to an arc of northern discomfort - to countries that don’t at all fit the stereotype of lazy southerners.

Notably, Finland is the new sick man of Europe these days. And the Netherlands - which in many ways is more German than the Germans are - is doing slightly better than Italy, but significantly worse than France and Portugal.

Indeed, France - the subject of a thousand news reports about how a generous welfare state is killing its economy - is doing relatively O.K.

The specific shocks vary. Finland has been hit by the fall of Nokia and the adverse effect of digital media on newsprint exports. The Dutch are suffering from a burst housing bubble, severe deleveraging and the extra burden of austerity mania. But the overall point is that when things go wrong, there’s no good answer.

So maybe the woes of the euro reflect a bad system, not a moral failure on the part of troubled nations. Das ist unmöglich!

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