by Jacques Attali and Haris Pamboukis
International Herald Tribute
December 16, 2010
Since the outbreak of the Greek debt crisis, Europe has tried to fix its problems in a stopgap and short-term manner. Not surprisingly, the crisis has continued to widen, threatening not only the individual economies of Ireland, Portugal and possibly Spain, but the European project itself.
It is time to address the crux of the matter with systemic change, before it is too late.
As it stands now, Europe’s member states have had no choice but to put themselves at the mercy of the financial markets.
The growing needs of modern states have pushed them to borrow increasingly, using ever more risky and sophisticated instruments. Investors have historically bought this sovereign debt because it has been a relatively safe haven. Unlike corporate debt, public bonds imply a guarantee backed by the state’s tax base.