Tuesday 16 January 2018

EU economic crisis 'being handled like Vietnam War'

Finbarr Flynn

Former US Treasury Secretary under Bill Clinton, Larry Summers, said European leaders' handling of the sovereign debt crisis evokes comparisons with US strategy during the Vietnam War until helicopters pulled out of Saigon.

"An observer such as myself, who wishes the project well but is able to maintain some degree of detachment, sees in some of what has taken place a pattern all too reminiscent of US decision-making during the Vietnam War," Mr Summers said at the Institute of International and European Affairs in Dublin.

Citing research by military analyst Daniel Ellsberg, Mr Summers said US policy-makers opted at each juncture of the war in Vietnam to do the "minimum" to avoid an imminent catastrophe "until it all collapsed around them and the helicopters left Saigon".

Mr Summers said that since May 2010 there had been a repeating cycle "playing out at an accelerating rate".

This starts with tension, followed by potential financial crisis in the periphery and summits that deadlock before a "fever pitch of tension" is released by an agreement.

The subsequent relief is followed by a re-emergence of anxiety as markets realise the problems aren't fully solved. Mr Summers added he wasn't confident that we had seen the last of those cycles.

"It may be the case that measures are now in place that will avert a severe financial collapse of major financial institutions or major sovereigns," he said. "That is not assured, but it is possible."

Still, it is "almost certain" that measures are not in place that will drive adequate economic growth. (Bloomberg)

Irish Independent

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