Even at the best of times, the International Monetary Fund was hardly known for untrammelled optimism. But the gloom that suffused its autumn gathering can have few precedents, in either intensity or scale. One warning followed another: that if nothing, or not enough, was done, and soon, we could be looking at the end of the international financial system as we know it. Given that this is what finance ministers and others were saying in public, one wonders what sort of language was flying around behind closed doors.
In fact, there was method here – at least we must hope there was. The US and the IMF, under its new head, Christine Lagarde, fear that without urgent and concerted measures the eurozone risks collapse. The culprit is not just Greece, though it is the most hopelessly indebted economy and the one under most imminent threat. It is what those outside the eurozone see as Europe's dilatory approach to devising a solution, and their concern that this leaves time for the contamination to spread.
Remedies are always easier to prescribe from outside, of course. What is holding the eurozone back is not stubbornness or caprice, but resistance from voters to underwriting more money for bail-outs. This is especially strong in Germany, which would have to do much of the underwriting, and the argument that action in the collective interest also serves the national interest is a hard sell when that collective includes a profligate Greece.
With default now apparently a given, the question is whether Greece can hold out long enough for there to be an acceptable plan in place. But there are dangers in trying to scare the eurozone into action. Statements, like that of George Osborne, who forecast that it has six weeks to get its house in order or else, risk deepening the very pessimism that itself saps confidence and growth.Reuse content