The European Banking crisis is old news. False. The Western European Banking crisis is old news. The crisis in "the banks of Europe" has not been fully covered.
Why, you may ask, did Krugman feel the need to be so bold (and so wrong) in predicting the euro's collapse over and over again, in his column, on his blog and to every media outlet that would give him an interview?
I would like to see Paul Krugman admit that he got the biggest call of the last several years dead wrong, again and again and again. Not only should he admit his mistake, but he should also apologize to the millions of people who have suffered as a result of it.
Despite some recent apparent signs of improvement, in the past two years we've had very negative economic news from Europe, particularly from countries such as Spain, Ireland, Greece, Cyprus, Italy, and Portugal. High unemployment, failed banks, fiscal insolvency, and a growing distrust of markets are just a few of the difficulties.
The central question for Europe's long-term future is: Should we change the influence of the nation states at the EU level?
If you go to a twenty-something's party in Berlin, you'll hear talk of start-ups and internships. At the same party in Athens most of the attendees will be unemployed, worried, distressed. And it becomes ever easier to forget that so recently we all stood together.
I was in the audience exactly a year ago when Mario Draghi, the well-respected president of the European Central Bank (ECB), made his now-famous "whatever it takes" remarks. Twelve months later, this stands out as the boldest and most successful initiative in the history of modern central banking. Yet the durability of the benefits is undermined by Europe's frustratingly slow progress in getting to grips with its growth and employment deficits. In celebrating the one-year anniversary, the West would be well advised to also think in terms of foregone opportunities. And we should constantly remember the millions of unemployed, the alarmingly high joblessness among the young, the struggles that too many face in securing their families wellbeing, and the growing number of retirees that are legitimately worried about their pensions.
"Today's youth no longer relates to the accounts of peace and war. They seem to have forgotten that peace on this continent can't be taken for granted. We must learn to constantly substantiate the idea of a common European home."
The workings of the public sector are so far off what they could and should be, and its existing human resources are so under-utilized that a solid rethink, pushed through with steely determination but also a deft touch, could transform the entire nature of public service in Greece.
Addressing the pain early will diminish the blow. We must do something now to protect higher education, or our colleges and low-income students will face dire consequences.
The sovereign debt crisis and the high social costs of austerity have severely weakened the eurozone's foundation. Whether this tottering edifice finally collapses and falls, or is able to right itself, will depend on re-founding a European narrative for the 21st century.
The controversy continues to simmer around the Reinhart-Rogoff paper. The re-examination should go a step deeper and ask why anyone ever took their argument seriously in the first place. It's not just the arithmetic on debt-to-GDP ratios that tripped up Reinhart and Rogoff.
By fixing annual budget deficits, Europe is shooting itself in the foot: while it does, of course, authorize lower budget deficits during good years, it makes it impossible to allow further budgetary deficits when the economy is in recession. Europe is in recession.
As European bank depositors, bank creditors and bank stockholders look back nervously at what happened recently in Cyprus, there is increasing speculation about what might happen to Slovenia and even some other European countries in relation to bank restructuring.
The wages of sin -- in the minds of Europe's born again Puritanical elites who observe the caveat that financial elites have a special dispensation from the Heavenly Father who already have squeezed through the eye of the needle.
We are now watching the second botching of a Cyprus rescue in less than a month. The implications cannot be good for Cyprus... and for Europe as a whole.