Euro crisis: latest downs and ups

1. Where were we at the time of my last blogpost - yesterday dinner time - oh yes, waiting for Slovakia to reject the creation of a European Financial Stabilization Fund to help back-up the euro and for the government to collapse as a result. Well, as predicted the Slovaks, the last of the 17 euro zone countries to vote on it, did precisely that. (The creation of EFSF requires a unanimous vote of all 17 countries).  The government has fallen

So it's all over, right?


As I said in that last post there will be a do over ... although when is not clear. One, Slovak member of Parliament told Agence France Presse, that it might come this afternoon.  Whenever it comes, the opposition parties have said they will vote in favor ... but only if Prime Minister Iveta Radicova calls a snap general election.

That too is expected to happen.

What this shows is it's the journey rather than the destination that makes covering this crisis so much fun.  At a press conference after the vote, Radicova asked, "Where would we be without the support and help from our friends in the eurozone? Our economy is 80% open and if the citizens of Spain and Portugal have no money to buy cars made here in Slovakia then that will be bad for us. Everything is connected."

Yes, everything is connected ... but there are many different kinds of connections, like the ones ambitious rivals form to force a government to fall ... and Slovakia, whose GDP is a mere 0.5% of the EU's total, has a fair number of those ... anyway, a new government will be formed soon and it is likely to ratify the creation of the EFSF ... at least that is the conventional wisdom of those reporters lucky enough to be spending the next few days in Bratislava.

2. IN slightly better news, the Troika: EU, IMF and European Central Bank, have agreed to give Greece the next tranche of bailout money.  That's 8 billion euros ($11 billion) coming in November.  That decision was made despite the Troika's acknowledgement that Greece will miss its fiscal targets for this year ... no kidding, you throw enough people out of work you are not going to get the kind of tax revenues you might get if you keep them working ... I wasn't a particularly gifted economics student but that is one concept that has stayed with me since Mr. Fisher of Harriton High School tried to impart his Knowledge to me.

3. Finally, Every once in a while you read a piece of clear-eyed analysis about the economic crisis that makes your jaw drop. This piece by Cambridge University economist Ha-Joon Chang is one of them. Read it, link to it, and if you have Thomas Friedman's personal e-mail send him a copy as well.