In This Review

Bust: Greece, the Euro and the Sovereign Debt Crisis (Bloomberg (UK))
Bust: Greece, the Euro and the Sovereign Debt Crisis (Bloomberg (UK))
By Matthew Lynn
Bloomberg Press, 2010, 288 pp

Uncertainty about the future and myopic thinking drive boom-and-bust cycles in financial markets. The same factors drive cycles in financial journalism. Immediately after the European Union and the International Monetary Fund bailed out troubled European governments in May 2010, when the reporting for this book ends, many were still predicting disaster for the eurozone. Lynn, a journalist, captures the conventional wisdom behind that pessimism. The euro, he says, was always motivated primarily by politics, not economics; the Germans accepted it only as a quid pro quo for reunification, even though it does not really benefit them. He believes that the debt contagion is likely to spread to Italy, Spain, and Portugal; that eventually the euro must collapse; and that Europe's and the United States' power have irrevocably shifted to Asia. But observers have grown more optimistic since Lynn wrote his book. The Europeans have redoubled their efforts to stabilize the system, because it is in their economic interest to do so. The French and the Germans are bailing out their banks, and the Greeks are working toward a restructuring or a partial default. Bust gives a sensible midterm report on the euro crisis, but the final chapter has yet to be written.