Euro governance rules target sovereigns while entirely ignoring private bank risk

Evidence

Imagine the future as a space of unrealized possibilities. You can accept that uncertainty and roll with it, or you can try to make the future behave within certain specified parameters, narrowing the space of possible futures. The way you do that is with rules. So long as they are clearly stated and everyone follows them, then according to this logic, the future will unfold, as you would like to see it, in accord with the rules. This is ordoliberalism gone mad, as well as the logic behind the euro. From the Maastricht convergence criteria to the Stability and Growth Pact to the promised new fiscal treaty that will solve all the euro’s problems once and for all (except that it will not), it’s all about the rules. But those rules only ever apply to sovereigns. There was of course a worry that some states may not follow the rules, so more rules were put in place. But there was never much attention paid to the possibility that private actors, such as banks, would behave badly. Yet this is exactly what happened, and the EU is still blaming sovereigns, tying them down with new rules, and insisting that this will solve the problem. — Mark Blyth, Austerity, 254

Categorization

• XREF: Connects to Mattei’s austerity critique and the broader neoliberal literature on rule-based governance; also resonates with the reader’s work on institutional design and blame-shifting. — connects to: European banks are too big for any single government to bail out — Mark Blyth, Austerity: The History of a Dangerous…, 37; Eurozone banking integration outpaced national resolution, producing too-big-to-bail systemic risk — Mark Blyth, Austerity: The History of a Dangerous…, 227; The European debt crisis resulted from banking losses, not sovereign overspending — Mark Blyth, Austerity: The History of a Dangerous…, 40 (+2 more)

Broader Connections

• The European debt crisis resulted from banking losses, not sovereign overspending #corroborates (0.90) — Mark Blyth, Austerity, 40
• European banking crisis was mostly private-sector exposure, not sovereign over-spending #corroborates (0.90) — Mark Blyth, Austerity, 240
• European austerity is a bait-and-switch to save banks from themselves without admitting it #expands (0.85) — Mark Blyth, Austerity, 208