If newspaper reports over the weekend are to be believed, German chancellor Angela Merkel and French president Nicolas Sarkozy are preparing a new eurozone stability treaty. Such news would almost be funny were it not for the seriousness of the euro crisis.

There is an old joke about a man being told by his doctor that he has only half a year left to live. “What should I do?” asks the frightened patient. “Marry an economist”, the doctor replies. “And, will that make me live longer?” the patient wants to know. The doctor’s answer: “No, but half a year will just seem much longer.”

Merkozy’s grand stability plan is just like this old joke. A new stability pact will not cure the ailing eurozone. It is just another placebo for capital markets that have lost confidence in European politicians’ ability to solve the continent’s many crises. …

As they say in German, ‘’Angst ist ein schlechter Ratgeber’’ - fear is a bad counsellor. Had German politicians kept this proverbial wisdom in mind, their reaction to the Fukushima nuclear disaster would have been different.

Before the decision to switch off their country’s nuclear power stations in a hurry, they should have considered the consequences for energy security, electricity prices and carbon dioxide emissions.

How many crises are there in Europe? First, there is a sovereign debt crisis, which is plain to see just looking at bond markets. Second, there is the crisis of competitiveness in European periphery countries, which is exacerbated by their membership of the monetary union. Third, there is a crisis of Europe’s banking system, which desperately needs recapitalisation.

But there is a fourth European crisis that has so far escaped the attention even of many professional observers. And yet, this fourth and largely unknown crisis has the potential to overshadow all other crises. It is Europe’s escalating balance of payments crisis.

There has been no shortage of bizarre twists and turns in the history of the euro crisis so far. But if German backbench MP Frank Schäffler gets his way the complex edifice of European bailout packages could collapse like a house of cards.

Capital markets are not loquacious storytellers. They condense the world into simple numbers. For this reason, the surge in Greek, Italian and Spanish bond yields could be mistaken for a mere technicality, a simple recalibration between the forces of demand and supply that happens in markets every day.

But these are no ordinary times. Through bond yields, credit spreads and bets on government defaults, capital markets are delivering the clearest possible verdict on the grand European experiment of social democracy.

Italy now needs to pay more than 7 per cent interest on its long-term borrowing, which means investors no longer believe that the country has a future in its present state. They doubt Italy can return from the brink of bankruptcy after wrecking its public finances through decades of overspending and over-borrowing.

Politicians and intellectuals still refuse to understand what is easily discernible on …

With the dramatic spike in Italian bond yields, the euro crisis has reached the stage everyone always wanted to avoid. Contagion has spread from Greece via Ireland and Portugal to Europe’s third largest economy, Italy.

It is blatantly obvious all attempts to solve the crisis, or maybe just to contain it, have failed. It is equally clear that the medicines prescribed to Greece have caused more harm than good. After two years in intensive care, the Greek patient is sicker than ever. Greece’s economy is collapsing, unemployment is rising and capital flight out of the country is in full swing.

Europe’s crisis management has been an utter disaster and no sanctimonious gloss from European “leaders” (the term is used here very loosely) can distract from the fact the eurozone in its present form cannot work and will not survive. It is high time to draw the …

Gestern Abend war ich in einer Talkshow des australischen Senders SBS zu Gast. Zugeschaltet aus Athen war George Charalampopoulos, ein Abgeordneter der PASOK-Partei. Es war unglaublich, aber in Charalampopoulos’ Welt war alles in Ordnung. Griechenland hatte keine Statistiken manipuliert, die Regierung hatte einen tollen Job gemacht und nun brauche das Land einfach noch etwas Zeit - kein Grund zur Panik.

Irgendwann wollte ich mir diesen ganzen Quatsch nicht mehr anhören und habe ihn dann gefragt, ob denn die 160 Prozent Staatsschulden nur eine Buchungsfehler gewesen seien. Und überhaupt, was er sich denn von einer neuen Regierung verspräche, wo doch Griechenland seine Demokratie und Souveränität längst an die EU abgetreten hat.

Da war dann aber für Charalampopoulos die Schmerzgrenze erreicht - und er verließ fluchtartig die Sendung. 

The assessment of Europe’s state of affairs could have hardly been harsher: “If you look at the troubles which happened in European countries, this is purely because of the accumulated troubles of their worn out welfare societies. I think the labour laws are outdated – the labour laws induce sloth, indolence rather than hard working. The incentive system is totally out of whack.”

If you believe this attack on Europe had come out of a right-wing think tank, an investment bank or a credit ratings agency you could not be more wrong. These are the words of Jin Liqun, chairman of the supervisory board of the China Investment Corporation, the sovereign wealth fund of the People’s Republic. They do not just highlight doubts about a Chinese engagement in the leveraging of Europe’s EFSF rescue fund. They …