Doubling Down On Debt

France, Germany and the EU Look For SolutionsThe central irony of financial crisis is that while it is caused by too much confidence, too much borrowing and lending and too much spending, it can only be resolved with more confidence, more borrowing and lending, and more spending. Most policy failures in the United States stem from a failure to appreciate this truism.

This Larry Summners quote seems to be in agreement with the philosophy of the current European Economic Community. This video explains some of the odd details of the bailout just announced. 

I think that this deal is doomed to collapse, but I doubt that one very interesting article is right and that it will collapse in two weeks: 

The eurocrats, of course, lack the guts to trim back monetary union to a more manageable size. Too much face would be lost. So "euroquake" fears, once viewed as outlandish, are gaining pace. Despite Thursday's deal, and all the reassurances of a "durable solution", the Italian government on Friday paid 6.06pc for 10-year money, up from just 5.86pc a month ago and a euro-era high. Such borrowing costs are disastrous, given that Rome must roll-over €300bn of its €1,900bn debt in 2012 alone. A default by Italy, the eurozone's third-biggest economy, and the eighth-largest on earth, would make Lehman look like a picnic.

I think the crisis will come and the longer it is postponed the worse it will be. I hope she is wrong and that we have some time to deal with the issue of excessive debt.