Three Answers to the Euro Puzzle
Most people have heard of the Marshall Plan. Some might even know what Brady bonds are. But they have not yet heard of the Brunnermeier plan. Or Bishop bonds. Or the Gros accord.
George H. W. Bush and Nicholas Brady, the Treasury secretary, center, in 1992 at the signing of a fund to help Latin America.
That is because they do not exist yet — except as dreamy proposals by economic thinkers to fix the European debt crisis.
While dealing with Europe’s financial difficulties has been a grim slog for the Continent’s austerity-weary citizens and its frustrated policy makers, it is the opportunity of a lifetime for ambitious idea merchants looking for fame.
If any of them can come up with a plan that is adopted by Europe, they will have secured a coveted place in history — like George C. Marshall, the secretary of state who fashioned the plan to help rebuild Europe after World War II, and Nicholas F. Brady, the Treasury secretary whose introduction of a class of investor-friendly bonds helped end the Latin American financial debacle in the early 1990s.
Three in particular who are respected in top policy circles and have access to the right people are Markus K. Brunnermeier, Graham Bishop and Daniel Gros.
Each is proposing a grand plan to save the euro zone from financial ruin — and to do it in a way that may break through the political impasse that has made a solution so elusive. None of them, or anyone else, are assured of success, given the depth of Europe’s problems and the difficulty of reaching consensus among the 17 European Union countries using the euro.
The rival approaches vary. But all are meant essentially to help the two big euro zone countries on the financial precipice — Spain and Italy — find buyers for their debt at a reasonable enough cost that their governments can afford to recharge their economies over the long run. Success would mean developing a solution that persuades cash-rich Germany that it will not be on the hook if these countries run out of money.
Armed with PowerPoint presentations and not a little guile, they have been promoting their competing ideas in meetings in Brussels, the center of the European Union; Frankfurt, home of the European Central Bank; and, in particular, Berlin, where the approval of German government officials is essential to the adoption of any plan.