When confidence in a regime’s permanence is shaken, it can collapse rapidly. The fear or hope of change alters people’s behavior in ways which make that change more likely. This applies to both political regimes such as Hosni Mubarak’s Egypt and economic regimes such as the euro.
The Super Mario Brothers need to work together to save Italy and the euro.
Even if Mario Monti can form a strong government in Italy, the euro zone is vulnerable to bank runs and a deflationary spiral. Stopping that is the role of Mario Draghi, the European Central Bank’s boss. The zone needs vigorous supply-side reform but looser monetary policy. With Silvo Berlusconi gone, the duo and Germany’s Angela Merkel should try to forge a new grand bargain based on this.
Chaos, drama and crisis are all Greek words. So is catharsis. Europe is perched between chaos and catharsis, as the political dramas in Athens and Rome reach crisis point. One path leads to destruction; the other rebirth. Though there are signs of hope, a few more missteps will lead down into the chasm.
The euro zone’s future hangs on Italy – and Italy’s future hangs on its politics. The best way forward would be a grand coalition replacing Silvio Berlusconi’s discredited government. But after the prime minister’s Houdini act last week, that doesn’t seem likely and other scenarios aren’t as attractive.
The euro zone is like Hotel California, UBS wrote in a report published in September. “You can check out any time you like but you can never leave,” it said, quoting the Eagles song. A British businessman, Simon Wolfson, has now offered a 250,000 pound prize to the person who can come up with the most convincing explanation of how an orderly exit from the single currency is possible.
By Hugo Dixon
If anybody can provide a measure of legitimacy to the trials of detainees in Guantanamo Bay, Brigadier General Mark Martins may be that person. Barack Obama will certainly be hoping so. Martins, who was on the Harvard Law Review with the president when they were students, has this week taken over as chief prosecutor for military commissions at a time when the highest-profile Guantanamo detainees are coming to trial. The first death penalty moved a step closer last week when a trial was ordered for Abd al-Rahim al Nashiri, who allegedly planned the bombing of USS Cole in 2000. The case of Khalid Sheikh Mohammed (KSM), the alleged mastermind of the 9/11 attacks, is likely to follow shortly afterwards, in what some people are dubbing America’s Nuremberg trial.