It has to get worse before it can get better

This is actually a comment made at Early Warning about the current Eurozone crisis. Any number of people, too numerous to mention, believe that the situation there (or here? We’re not part of the Euro, but are economies connect closely) is a slowly unfolding train wreck, but that as so often elsewhere, the politicians don’t fully understand the problem, and/or institutional inertia prevents effective action. And this will continue until the problem becomes so bad that pretending the problem will go away if we talk a lot is demonstrated to be wrong by reality rather than just careful analysis.

Which is just like GW. Doing something about GW will cost money, and will upset powerful interests, and the effects are in the future and aren’t clearly understood, and “why don’t we just quietly do not very much for a while” is so much easier. By contrast, the Eurozone problems are about as acute as they can possibly get without being completely fatal, and yet people are still flailing.


* Looks like Reiner Grundmann reads stoat

15 thoughts on “It has to get worse before it can get better”

  1. But who should we blame? Humanity? Media? politicians?

    Think I would go something in that order…

    [It is tempting to say “We Are All To Blame”. But that means blaming no-one, in practice. The blame is more widely spread than usually said: its not good blaming Evil Corporations or Corrupt Politicians for either the Eurozone woes or GW; they are our creations -W]


  2. > slowly unfolding train wreck

    “Block that metaphor!”

    Most train wrecks could have been avoided by properly setting a switch or signal; noticing an incorrect signal; noticing running past a stop. Simple cause, simple effect.

    Financial markets are more like whales, specifically dead whales; whatever you do, the results are unpredictable.

    [The wiki page is good:

    Metaphor: I used train wreck as a shorthand. What I was actually thinking of was something more like a supertanker grounding, or indeed the megaship crash in “Consider Phlebas” – the idea that although the point of contact has happened, and the bows of the ship are already crumpled beyond repair, the structure is so enormous that the stress hasn’t yet propagated back to the bridge which is still gliding blissfully unaware that wreck is already inevitable -W]


  3. You are right. As long as there is no one in charge then the difficult decisions cannot be taken. Britain, represented by Tony Blair in the last round of negotiations, prevented Europe from having a strong democratically elected president. That is what is needed now to sort out this mess.

    The USA is preventing the formation of a strong UN which is needed to take the difficult decisions regarding AGW. In both cases it is the right wingers who are leading the opposition, but the general population tend to support them. Thus if you spin “We Are All to Blame” to mean “It is just human nature”, then you are right again.

    Cheers, Alastair.

    [I don’t really agree with this. There is far more than the US preventing a strong UN. We aren’t really close to a “world govt” type body, no matter what the black helicopter folk may say -W]


  4. I suppose just going back to the pre-Euro currencies is too simple?

    [To be fair, there was a good economic as well as political reason for the Euro. But politics dictated that it spread too widely, and too many lies were brushed under the carpet in the good times -W]


  5. The analogy is strained, I think. There aren’t necessarily obvious “powerful interests” who are lined up against some of the possible solutions to the Euro crisis, like say, issuing Eurobonds. Those ideas are just unpopular among your everyday German citizens.


  6. Climate change is the easier of the two.

    Carbon tax, lower other taxes to compensate and wait 20 years. We’re done.

    The euro shouldn’t have been done in hte first place but since it was we’re stuck now with a whole lot of pain for someone or other. Deciding who is going to take that pain is the difficulty.

    Climate change, as long as we go with the technological and capital cycle, doesn’t have to hurt anyone very much: it’s only trying to force it, do it quickly, that might cause pain.

    [Everyone is running scared from the “tax” word in “carbon tax”. Apart from the Australians. Perhaps if that works out and everyone else sees there is nothing to be afraid of, things might get better. But Europe is still stuck in its stupid LETS scheme, or whatever it is called -W]


  7. The ECB is not allowed to bailout any member nation governments. So their is no clear backstop which leaves governments vulnerable to self fulfilling bond market panics. I don’t see how you can blame this on anyone but the politicians that set up the rules in the first place.

    Almost all the member nations would be better off with higher inflation, but Germany is still scarred by its episode of hyper-inflation. I guess you could blame “the people” for this.


  8. I’m in favor of a Fossil Caarbon Open Air Disposal (FCOAD) fee.

    No use of the bad three letter word beginning with ‘t’ and ending with a wretched ‘x’.


  9. George Soros makes two major points in a recent New York Review of Books essay: (1) The fiscal responses to the Euro crisis would have been helpful had any of them occurred even a few months earlier, but by the time they’ve occurred they’ve already become ineffective half-measures; and (2) The root problem is that the Eurozone has a single currency but not a single central bank with a single currency policy. He thinks this crisis will lead to formation of a central bank, but, of course, too late…

    Yes, the parallels with AGW are acute, except that the Euro crisis has already reached a stage we probably won’t reach with AGW until 2025 or 2030 – at which time we will commence ineffective half-measures. (But perhaps I’m just a cockeyed optimist!)


  10. WIlliam,

    I recommend you to read (if you want to better understand the financial shit we are in) to read The Automatic Earth (Stonelegih and Ilargi) and also Zerohedge:

    I would say it will get MUCH MUCH worse before it gets better, and 10 years from how hardly few people will be interested in climate change, unfortunately. I, myself, gave up on collective long-term thinking and actions,



  11. Oh, and if you want to know few days in advance when Italy (and later on Spain) will need financial “help”, just check 10-years government bond yields here:

    when they are to cross 7 %, Italy is unable to borrow from the market and they will need bail out, just as did Greece, Portugal, and Ireland to date. Rising risk (interest rate) on borrowed money is a “side-effect” of debt-deflation, and also expect “Lehman moment” not too far in the future…



  12. No one in charge? Say it isn’t so! It almost sounds like Nancy Pelosi in charge behind the scenes. “You have to pass the bill BEFORE you can find out what’s in it.” = “It has to get worse before it can get better.”


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