The Story of the European Bank Run

I am not always a fan of Paul Krugman. It isn't (always) his analysis itself which bothers me, but rather his seeming inability to separate the economics he originally became famous for from the type of snippy, often too personal political discourse which has since kept him in the spotlight. To be fair, this mixing of real economic analysis with personal pettiness is seemingly part of his job description with The New York Times at this point. However, when I see examples of the clear, thoughtful analysis he is capable of, it makes the other 'stuff' all the more frustrating.

An article representing such a valuable contribution to the current economic discourse can be found here. In the article, Krugman looks at the crisis in Europe and examines the actual differences in the behaviors of the nations which are often lumped together as 'in trouble.' In doing so, he separates the Spain's and Italy's of the EU from the Greece's by noting that the former two states were in far superior economic situations, at least prior to the economic meltdown, than the latter.

He therefore attributes the current troubles facing them to a sort of sovereign bank run. He doesn't dispense with the opinion in this piece; indeed he calls for Jean-Claude Trichet and the ECB to start buying up debt and ignore the moralists who have said that the Mediterranean nations need to take their medicine. However, in the post he manages to avoid the kind of personal potshots which seem to pervade some of his other articles. The suggestions are also timely and relevant as banking systems of individual nations and perhaps even the EU experiment come closer to unraveling. I doubt this will get to his ears (or that he would care if it did...), but Bravo, Mr. Krugman.

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