No. European central bankers will.

Europe is justifiably worried that the Greek debt crisis is spreading. Clearly, it is.

“It’s like Lehman Brothers and Bear Stearns,” said Philip Lane, a professor of international economics at Trinity College in Ireland, referring to the Wall Street failures that propelled the financial crisis of 2008. “It is not so much the fundamentals as it is the unwillingness of the market to fund you.”

“The situation is deteriorating rapidly, and it’s not clear who’s in a position to stop the Greeks from going into a default situation,” said Edward Yardeni, president of Yardeni Research. “That creates a spillover effect.” […]

Ángel Gurría, head of the O.E.C.D., said ahead of the meeting that the euro zone countries had to act “very fast.”

“It’s not a question of the danger of contagion,” he told Bloomberg television. “Contagion has already happened. This is like Ebola. When you realize you have it you have to cut your leg off in order to survive.”

But this was a manageable situation that then raged out of control. It’s like a common cold turning into Ebola. Dean Baker summarizes:

It would have been helpful to point this fact out in an article reporting on the Greek and eurozone financial crisis. While Greece did have serious fiscal problems prior to the economic crisis, the other countries now facing difficulties were not similarly troubled. Spain, the most important of the troubled countries, actually was running surpluses prior to the crisis. The difficulties now facing these countries is largely the result of the economic downturn, which has seriously worsened their fiscal situation.

The European Central Bank (ECB) could make the money available to these countries to sustain their economies through this downturn. (They would print it.) The ECB has opted not to go this route because of peculiar superstititions about inflation. It would be worth pointing out to readers that this crisis is largely the result of superstitions by Europe’s central bankers, not fundamental economic problems.

Right. The European Central Bank has resisted both fiscal and monetary supports for the economy, and this is the none-too-pretty result. As much as the US stimulus was too small for the problem, it dwarfed the European response. And the same with monetary policy. So Europe drags, and that has consequences here as well in this global economy.

What a predicament.

David Dayen

David Dayen