Europe teeters on the edge of the Eurozone and markets thrash. So whose fault is it?
Is it the fault of those who cannot pay back their loans (poorer countries like Greece)? Or of those who made them in the first place (richer countries like Germany and investors in debt)? No doubt both sides are guilty to some extent.
But what all sides are equally guilty of is blind faith in ‘the market’. Markets will not reflect reality unless:
- participants know the underlying economic situation of the other party
- failure to honour a debt is always punished.
Yet the first proposition is usually untrue and the second is both untrue and undesirable.