The collapse of Greece's economy, and its domino effect on Spain, Portugal, and other countries in the euro currency zone, is in many ways a replay of an earlier financial crisis--the break-up of the continent's Exchange Rate Mechanism in 1992. Then, as now, Europe's policymakers showed little patience with--or understanding of--markets. Then, as now, Germany often seemed contemptuous of the less competitive economies on the periphery of Europe.
The 1992 crisis came to a head on Friday September 9, when currency speculators forced the devaluation of the Italian lira. By the following Tuesday, Britain was facing the same fate.
And the UK Governments have been running scared of the Markets ever since...
We truly do live in a mad world.
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