He doesn't go quite as far as I did yesterday when I said that the ongoing European debt crisis has spawned a series of financial coup d'etat, with democracy being subjugated to the needs of markets. But at Project Syndicate, Kemal Dervis lays out a similar case:
Beyond the specific problems of the monetary union, there is also a global dimension to Europe’s challenges – the tension, emphasized by authors such as Dani Rodrik, and Jean Michel Severino and Olivier Ray, between national democratic politics and globalization. Trade, communication, and financial linkages have created a degree of interdependence among national economies, which, together with heightened vulnerability to financial-market swings, has restricted national policymakers’ freedom of action everywhere.
Perhaps the most dramatic sign of this tension came when Greece’s then-prime minister, George Papandreou, announced a referendum on the policy package proposed to allow Greece to stay in the eurozone. While one can debate the merits of referenda for decision-making, the heart of the problem was the very notion of holding a national debate for several weeks, given that markets move in hours or minutes. It took less than 24 hours for Papandreou’s proposal to collapse under the pressure of financial markets (and European leaders’ fear of them).
So there you have it. Democracy is just too slow!
Of course, the Greek debt crisis has been underway for what I think is going on three years now, so one wonders why the markets were so freaked out over two weeks of political debate. The answer is that they're markets: they're hysterically narcissistic and they don't like it when people stop paying attention to them every minute of every day.
Actually, the lesson of the Euro crisis should be that a financial meltdown can take some time. When the U.S. was hit by its financial crisis in 2008-09, the mood was completely apocalyptic. A lot of otherwise reasonable people thought the world was coming to and end. Which it was. On Wall Street.
So the market got its way then, in a hurry. In Europe, it's had to wait and wait. But that's for various financial technocrats to get their ducks in a row. Waiting on political debate? Unforgivable!
Dervis is right to zero in on this challenge and to stress that's its about nations, narrowly defined but democratic in nature, and global markets, which are big, fast, and increasingly intolerant and impatient.