Is talk of Grexit a smoke screen for global economic meltdown?
Welcome to Capital Account. Working in broadcast media, it is easy to get sucked into the vortex of the 24-hour news cycle, with all its spin, its nonsense, and its manufactured sense of urgency. The world however, is infinitely more complex than anything we can express in 30 minutes on this show, and yet, we do not cease trying.
Today, the major financial news outlets have again turned their focus to Europe. The economic downturn there has persisted, for some countries, going on 5 years, with no end in sight.
Talk of a Greek exit – the Grexit as it has been dubbed – is the talk of the town. Will Greece exit the euro, what will this mean for the other economies, for the people of Europe, for the people of the world…
We look at charts, at numbers, at fancy statistics that tell us whether we grew by half a point here or contracted by a quarter of a point there. Today, we learned that the eurozone member economies jointly contracted this month at the fastest pace in almost three years. Some will ask: what does this mean or why did this happen?
But the media always seem to circle back to the same basic question: what do we do about it? But does this question begin from a false premise, that highly fallible human beings, sitting in ivory towers can somehow fix the lives of 7 billion people, simply by pulling the right policy levers? By making a few extra loans or spending a few extra dollars or euro?
What if the correct response, as our guest Jim Grant has said in the past, would be to do…NOTHING…try that on for size… Maybe, just maybe, the world, and our “policy overlords” included, should spend less time doing, and more time thinking… thinking about the mess we have all created with our attempts, one after the other, to fix this or to tweak that: “to do something” – believing that a handful of bureaucrats can steer and guide an entire mass of people, their lives and their ambitions.
But, we are not bureaucrats, policy makers or central bankers. We are, by force of profession, obliged to think, reflect, and occasionally offer our opinion. It’s all we can do for now, and to help us do this is Edward Harrison of Credit Writedowns.