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In the Euro Zone, a Lethal Vacuum β€” Economic View - NYTimes.com


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Europe may be burning down.

We're in a tragically dangerous situation, and most Americans lack the sophistication to understand how delicate this all is:

We are realizing just how much international economic order depends on the role of a dominant country β€” sometimes known as a hegemon β€” that sets clear rules and accepts some responsibility for the consequences. For historical reasons, Germany isn’t up to playing the role formerly held by Britain and, to some extent, still held today by the United States. (But when it comes to the euro zone, the United States is on the sidelines.)

THERE appears to be a power vacuum, and the implications are alarming. We may be entering a new world where international cooperative arrangements, in environmental areas as well as finance, are commonly recognized as impossible. If the core European nations cannot coordinate effectively, what can we expect in dealings with China, Russia and other countries that have less of a common background and understanding?

In the euro zone, we are seeing two refusals to cooperate: Germany won’t renew financial pledges to Greece without Greek compliance on previous agreements, and Greece doesn’t want Germany to control its national budget. Both seem reasonable positions, and maybe they are, but reasonable positions can apparently destroy an international agreement rather easily.

And this frightens me: "The final lesson of this debacle is that smart nations with noble motives can make very big mistakes. And that should concern us all."

This is bad, and I'm certain the U.S. Congress will go out of its way to make it worse.

I'm not sure how yet, but they have a knack for worsening things.

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