Doom, Doom, Doom, Doom

Kevin Drum beats the drum of Euro doom.

I keep thinking that, when Greek default, cascading bank failures, or dissolution of the eurozone — or all three — appear truly imminent, European leaders will finally buckle down and do what needs to be done. But the last couple of weeks haven't done much for my confidence on this score. If anything, Europe seems to be drifting ever further toward lifeboat ethics. The bad kind, that is. The every-man-for-himself kind. And we finally seem to be genuinely close to a point of no return. Once the financial markets decide to attack — either a country or a banking system — they can't be bought off with half measures. It's either a full-scale, damn-the-torpedoes rescue or else it's catastrophe. And right now a full-scale rescue isn't looking very likely. Instead, "austerity" is the order of the day, which is sort of like thinking that maybe the steerage decks are really the best place to ride out the sinking of the Titanic.

But hey, that's just Europe, right? It's not going to affect us, is it? Why, just a few days ago, Ben Bernanke said that our financial exposure to European problems was "manageable." So there's nothing to worry about. But then again, this is the same guy who said in 2007 that "the impact on the broader economy and financial markets of the problems in the subprime market seems likely to be contained." So maybe it's time to stock up on canned goods after all.

Are there any Euro optimists left in the house?

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