The Eurozone’s Existential Challenge

The financial crisis became the moment of truth for a very momentous and ambitious experiment: the Eurozone. As we saw in Chapter 4, European policymakers initially looked at the subprime crisis with a certain degree of detachment, at times even a dose of smug satisfaction. They regarded it as a U.S. crisis, which would expose the underlying and underestimated weakness of the American growth model while vindicating the sustainability and superiority of the European one. Then Europe suffered a deeper recession than the United States, and the European financial sector proved to be as exposed and fragile as its cross-Atlantic counterpart, providing a healthy lesson in humility. But as it turned out, this was not the end of the story; far from it. The financial crisis would prove to be a veritable existential challenge to the Eurozone.