Europe Still Slouching Toward Catastrophe

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The eurozone economy is headed toward recession again, and Ryan Avent is beside himself:

Ordinarily, of course, policymakers would react to this deterioration by taking steps to stabilise the economy. What is most frightening about the euro-area picture is that this is not happening. For now, austerity remains the rule. Despite the nastiness of the economic picture, the ECB is widely expected to take no action at its meeting tomorrow. The euro area is walking, eyes wide open, into depression. Led by its periphery, which is already there.

….If, when all of this is said and done, the euro zone descends into a chaotic, costly break-up, many people will write that such a thing was inevitable, unavoidable. They’ll be wrong. We are watching causation this very moment: institutions that know how and why to prevent things from falling apart and which nonetheless sit back and do nothing.

It’s a dismal prospect, all right, and in the future the collapse of the eurozone — if it happens — will probably become a textbook example of the difficulty of collective action, right along with climate change and the League of Nations. In the long term, Europe’s periphery needs to credibly commit to even greater labor market reforms than they already have, but further reforms seem politically hopeless and no one really knows how to make them credible in any case. In the short term, Europe’s core needs to pony up more money, but that’s politically hopeless too, especially in the absence of credible long-term reforms in the periphery. And so the entire continent is stuck. The lack of a mechanism to commit to credible long-term reforms prevents any credible short-term action, and the lack of credible short-term action makes long-term disaster a growing certainty.

Brad DeLong shakes his head in dismay:

I feel as though I am sitting through a Charlie Kindleberger lecture about Europe in the early 1930s. Every country thinking that the global and continental level of aggregate demand was somebody else’s business. Every country thinking that if only it could impress international investors with its creditworthiness that investment would flow to it and away from other countries. Nobody willing to act like a hegemon. And nobody upset at the absence of a hegemon willing to act responsibly.

Three more months of this and I will be calling on European sovereigns to incorporate themselves in Delaware as bank holding companies and join the Federal Reserve System…

We’re now in — what? Phase 4 of the euro crisis? Phase 5? I’ve lost count. At some point, though, the latest half measure from the great and good of Europe won’t calm markets for even a week, let alone six months. When that happens — if it happens — we’ll all be well and truly screwed.

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WHO DOESN’T LOVE A POSITIVE STORY—OR TWO?

“Great journalism really does make a difference in this world: it can even save kids.”

That’s what a civil rights lawyer wrote to Julia Lurie, the day after her major investigation into a psychiatric hospital chain that uses foster children as “cash cows” published, letting her know he was using her findings that same day in a hearing to keep a child out of one of the facilities we investigated.

That’s awesome. As is the fact that Julia, who spent a full year reporting this challenging story, promptly heard from a Senate committee that will use her work in their own investigation of Universal Health Services. There’s no doubt her revelations will continue to have a big impact in the months and years to come.

Like another story about Mother Jones’ real-world impact.

This one, a multiyear investigation, published in 2021, exposed conditions in sugar work camps in the Dominican Republic owned by Central Romana—the conglomerate behind brands like C&H and Domino, whose product ends up in our Hershey bars and other sweets. A year ago, the Biden administration banned sugar imports from Central Romana. And just recently, we learned of a previously undisclosed investigation from the Department of Homeland Security, looking into working conditions at Central Romana. How big of a deal is this?

“This could be the first time a corporation would be held criminally liable for forced labor in their own supply chains,” according to a retired special agent we talked to.

Wow.

And it is only because Mother Jones is funded primarily by donations from readers that we can mount ambitious, yearlong—or more—investigations like these two stories that are making waves.

About that: It’s unfathomably hard in the news business right now, and we came up about $28,000 short during our recent fall fundraising campaign. We simply have to make that up soon to avoid falling further behind than can be made up for, or needing to somehow trim $1 million from our budget, like happened last year.

If you can, please support the reporting you get from Mother Jones—that exists to make a difference, not a profit—with a donation of any amount today. We need more donations than normal to come in from this specific blurb to help close our funding gap before it gets any bigger.

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