Center for European Studies, I was struck by the similarities between the way debt crisis is playing out this week and Lars von Trier's brilliant film, Melancholia.
In the film, an exoplanet is on a potential collision course with Earth. The next crucial days will tell whether it destroys the planet or simply keeps people in a state of deep anxiety and a rising sense of panic. Early on, despite the growing blip on the horizon, most of the characters are unaware of or ignore the danger and party in some vague Northern Europe land at the lush, candle-lit manor of a hedge fund manager.
Here on real Earth, there is a deepening sense that an exocurrency threatens to crash in Europe and destroy the global economy yet the northern Europeans don’t get the danger. Goldman pointed out, in a sentiment that was clearly shared in the room, that this week is crucial for the fate of the Euro. All eyes will be on the Brussels summit on Thursday and Friday to see whether the leaders of Europe are able to agree on measures to resolve problems of the Eurozone in a way that calms the markets.
But the main thrust of Goldman’s presentation was why Germany is having such a hard time doing what everyone wants it to. His argument was nuanced but boiled down to this: it's because many Germans do not see a crisis, after all their economy is not in bad shape, and have been ignorant of what real failure would mean not just for the rest of Europe but for Germany itself. Thus, while the SPD is actually supportive of what Merkel now, belatedly, wants to do, she hasn’t had the support of her own party and coalition partners to act. For Germany to act, there has to be a real crisis.
Let us hope that the politicians have not waited so long that it becomes impossible to shift the trajectory of the Euro off the path of disaster and destruction.