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You're reading: STRATFOR: Precise solutions in an imprecise reality

An important disconnect over the discussion of the fundamental dilemma of Europe — which is political and geopolitical — remains.

STRATFOR has examined the plans for dealing with the financial crisis in Europe, and we find them technically plausible, even if they involve navigating something of a minefield. The eurozone’s bailout fund, the European Financial Stability Facility, would be expanded in scope and reach until it can handle the bailout of a major state, the default of a minor state and a banking crisis of unprecedented proportions. Given assumptions of the magnitude of the problem and assuming general compliance with the plans, there is a chance that the solution we see the Germans moving toward could work.

The extraordinary complexity of the plans being floated in Europe is important to note. It is extremely difficult for us to understand the specifics, and we suspect the politicians proposing it are also less than clear on them. We have found that the more uncertain the solution, the more complex it is. And the complexity of the European situation is less driven by the complexity of the economics than by the complexity of the politics. The problem is relatively easy: Banks and countries under massive financial pressure almost certainly will default without extensive aid. By giving them money, default can be avoided. But the political complexity of giving them money and the opposition by many Europeans on all sides to this solution contributes to the complexity. The greater the complexity, the more interests can be satisfied and — ultimately — the less understanding there is about what has been promised. Some subjects require complexity, and this is one of them. The degree of complexity in this case tells another tale.

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