Thursday, April 10, 2014

The South

Just to make an additional point related to this, I lived in Yurp during the time leading up to the adoption of the Euro. Without getting too much into all of the issues, the basic problem was that southern Europe was poorer than northern Europe. European money was being redistributed to the poorer relations for infrastructure upgrades and similar in order to try to pull them along a bit faster.

While it was true that The South was poorer, in general terms, it was also the case that there was some sense (among ruling elites in the North) that this was simply the natural order of things. Yes, yes, we'll let our poor relatives come live in the carriage house, but inevitably they're just going to keep it dirty and let the roof cave in.

So when the crisis hit, "of course" the poor relatives were to blame and well we expected this and I guess it's time for them to learn their lessons. Arguably Greece (as an entity, not all Greeks) were somewhat to blame, but Spain really didn't do anything they weren't supposed to do.

The ECB would have behaved differently if the crisis had been concentrated in the wealthier bits, because they of course wouldn't have been to blame.