The Daily Beast
December 1, 2011
By, Zachary Karabell
As Americans went about their lives this past week recovering from turkey, bemused by the latest Herman Cain dramas, the world almost changed dramatically. Fortunately, the largest central banks joined forces to stem the mounting financial crisis—for now.
World equity markets rallied powerfully yesterday after the move, to the tune of more than 4 percent. Yet stock markets were the real story. What happened was nothing less than a Rubicon moment in what was shaping up to be a financial meltdown of global proportions that would have made what happened in the fall of 2008 look tepid.
The reason, of course, is the crisis of the euro zone. And a crisis it is, with every major European leader attesting to just that. In the past two weeks, that crisis went from slow burn to raging fire. You wouldn’t have known that from the mainstream media, but the panic in finance-land was palpable, so much so that I began to wonder if we were at an August 1914 moment, when the world was about to change forever—and not in good ways.
It wasn’t just the normal array of doomsday voices noticing a sudden deterioration of credit markets and adding their own pessimism about things like fiat currencies and towering mountains of debt. It was the clear indication that the European Union and the common currency were in peril, and that there is no road map for its dissolution. As one European minister put it, it is fairly easy to make an omelet out of a bunch of eggs, but how to do you make a bunch of eggs out of an omelet? The path to creating the euro was complicated enough, but the way out? There is none.