Edward Gardner:	Thank you very much for that introduction. I'm amazed you were able to dig up my ... The title of my graduate thesis. I, myself, could not really ... Would not have been able to remember the titles. Kudos to you.
	Well, it's a very great pleasure for me to be back here at Swarthmore to reconnect with the faculty and connect with students. I have been an economist for over 30 years now. As a student first, and then in my professional career. And it was really at Swarthmore that that path began. 
	When I came to Swarthmore, I really had no clue what economics was about. I really never heard about it as a discipline, as such. Eventually, into it out of curiosity, but it was really the faculty here that turned that curiosity into a vocation of sorts. And I must say that Bernie Saffran was really very instrumental in making that happen for me. I remember with great fondness the economic theory seminars that he taught. As times are really intense learning, intense discovery. In a way he played a big role in making me see economics as the discipline that allows you to make sense of relationships that seem completely unrelated. And to see how pretty much everything involves trade-offs. And also, I remember him for his generosity of time and enthusiasm. And how I pestered him often walking him home after a seminar, because I wanted to continue discussing things well beyond the time allotted during the seminar. But he always did so, very graciously. So, it's not only a pleasure, but a real honor for me to be here, and to be here to remember the contribution that he made to this college and onto many students like me. 
	Let me turn now to the topic of this seminar. But perhaps I should start by saying that of course economics is a profession that doesn't have the best of reputations these days. And we as economists don't always get it right. And often what we think we understand to be the way things were, turn out to be very different when new events come our way. And I think the Great Recession was for everybody a great lesson in humility for economists. Specially, into how we understand the world to work. 
	And the topic for this evening's discussion, which is the European crisis and its resolution, I think perhaps, better than most illustrates this notion of risks that with hindsight seem obvious, but were completely undetected and unrecognized at the time by most people. And how decisions always involve very difficult trade-offs. 
	Now, the economic crisis in the Eurozone exposed very deep fault lines, which at some point nearly caused the whole monetary union to unravel. And risk reversing the process of integration that had been taking place over decades. Very difficult, slow, but continuous progress. So, the question's whether this crisis was an accident waiting to happen, whether it should have been anticipated. And these are some of the questions that I'd like to touch on during this talk. 
	But before getting to these questions let me just give you a quick visual if I can work this. Yes, I can. Of the economic situation in the Eurozone. So, Eurozone, Euro area, here you see the real GDP evolution of United Kingdom, Euro area and United States, with very clearly a very, very poor economic performance in the Eurozone. Now, the outset of the crisis that started in U.S., the spill-overs caused the Eurozone to undergo the same recession. But it was really when in 2011 the Eurozone faced its own separate crisis, that things started unraveling out of control. And the fact that everything we've learned about how to come out of a recession, all the policies that we thought we knew could be mobilized to help come out of recession, just did not seem to work in Europe and [inaudible 00:04:42].
	Now of course, within Europe you also had very large differences, within the Eurozone. Germany did not do so well, but surely in comparison to others fared relatively well. And Germany is today pretty much at full employment, even though growth is not very strong. But you can see clearly that behind the average lies some very difficult cases. Italy and Spain contracting still from 1998, and Greece being obviously the most critical case with a loss of output of nearly 25% since prior to the crisis. 
	Now the fact that these developments were really not fully expected is also clear in the way we at the IMF, but similarly all other forecasters have been forced into making serial downward revisions in our growth forecast. So, every year we keep thinking that things are going to get better, and find ourselves forced to revise down our growth. As you see, the curve only go to the right. But I think the good news is that our next forecast, which is coming out in a month should, hopefully, see that curve move left. So, there is some hope that the Eurozone will come out of its crisis, but, again, its been a deep crisis and one that has kept surprising all observers.
	So, in this talk I will like to advance the following ideas: First of all, the countries of the Eurozone entered into this currency union knowing full well that it was supported by or rested on incomplete institutions, and that there were therefore risks. But that these risks would be mitigated by fiscal framework of fiscal rules and no bailout clauses. That should have ... It created incentives for good and prudent fiscal behavior, and that could have therefore prevented one country from creating havoc for the rest of the Union by accumulating excessive debt and then trying to push it onto the others. 
	However, what we also found is that the ... When things started to unravel, it wasn't really only fiscal indiscipline, or lack of fiscal discipline that caused the problem. There was also a serious lack of market discipline. And financial markets essentially failed to discipline irresponsible borrowing, more so than fiscal rules did. And when the crisis hit, as in the U.S., what seemed to be a problem of excessive private debt, soon became a problem of excessive public debt. Private debt never ended up staying in the private sector, but were shifted on to governments.
	Now, unlike the U.S., however, as we saw the Euro area, economists, Eurozone economists have struggled to recover. And that was in large part due to a very slow and inadequate policy response. But here, I think it's important to note, and I will develop this theme, that it wasn't just that European policy makers did not get it, or did not know what to do. It was really that the Union did not have the institutions to coordinate a response that would've been appropriate. And it proved to be very, very difficult to build a consensus around what was needed, while at the same time trying to resolve the problem and shifting the cost of that crisis across the borders. 
	Now, even though there are positive signs of a recovery, as I said, those institutions are still at the very early stages of construction. And so I think in the next few years of policy work, both in Europe and in all the institutions that work with Europe, including the IMF, would be to continue providing advice on how these institutions should be built. And I'll get more into this, but institutions that can mitigate the risks of future crisis, and hopefully prevent them before they start.
	So, this is sort of what I want to develop in the course of this talk, but first let me discuss briefly about the origins and the rationale of a currency union. And why are countries interested in entering into currency union in the first place. What do they have to again from that? 
	Well, in a seminal paper in 1961, Robert Mundell set out to explain what the benefits, the cost of benefits were of a currency union. It was a theory of optimal currency areas. And what it discussed is obviously that on the positive side of countries joining under single currency, is the fact that joining under single currency creates strong incentives for trade and for the free movement of capital and labor. And in the process, therefore, it creates opportunities for growth and higher income. So, that's the positive aspect.
	The negative side is that in order to engage into a currency union, you obviously have to give up your own currency. And giving up your own currency also means that you no longer have the option of using interest rates, your own interest rates, your own exchange rate as an instrument to adapt to a shock that your economy faces. 
	So, again here we have a trade-off. Are the benefits worth the cost? Well, Mundell stipulated three conditions under which the benefits would exceed the cost. One is that labor and capital are fully mobile within this bigger union. And why is that? Well, one explanation is for instance, if you have a shock that creates high unemployment in one region. One way to absorb that problem is for those resources to move to where jobs are more plentiful. So, if people can move from Spain to France, and Spain hits a bump in the road, that fact that people can find jobs in France would basically help assuage the problem, without the need for monitary independence. 
	Another condition is flexible prices and wages. Or at least sufficiently flexible prices and wages. And this for two reasons. One is that when prices and wages respond to conditions of excess supply and excess demand, that's a signal of how resources can be reallocated. So, it helps the process of moving resources from where they're in excess to areas where they're in demand. But also you can think of flexible wages as being an alternative to exchange reflexibility. Because what is the exchange rate movement? It's basically changing all the prices in your economy at once, in response to a shock. The same result can be achieved by allowing your wages to move just as flexibly to the shock. 
	And the third condition for an optimal currency area was that countries should be similar enough so that a shock that hits one country tends to also to hit another country in the same way. So, some synchronicity in shocks, which means that then the monetary policy set for the whole region, pretty much is optimal for all the sub-components. 
	Now, these conditions were pretty strong and everybody at the beginning, from the outset understood them not to be really holding, in the case of Europe. Yes, labor could move from one country to another, but in fact, they were a lot of obstacles to doing that. I mean, apart from cultural and language barriers. Moving to another country made you lose your unemployment rights, or your pension rights. Or housing rigidities made it very difficult to abandon your own house to seek for another house. So, the fact that mobility was not as ideal as it would've been.
	Prices and wages were not quite as flexible. They're never very flexible, including in the U.S., but in Europe they were particularly rigid. Which means that if unemployment increased in one areas, wages would not react very fast to correct that problem. As, for the synchronicity of business cycles, that issue seemed to be less of a worry, and as much as the currency area was very much integrated in terms of trade. So, through the trade channel shocks should be pretty much similar across countries. 
	Not withstanding these constraints, the hope was that by joining into a currency union, the countries would gradually develop trade linkages. Markets would become more efficient, and in the process they would create an optimal currency area. So, you put basically the cart before the horse, and eventually the result is that the conditions that you didn't have in the beginning would gradually develop and validate the choice that you have made. 
	The other advantage of moving into a currency union was that as soon as you joined the Euro, you suddenly eliminate the risk of exchange rate fluctuations or for the countries that had relied on devaluation, basically you remove the risk of that currency ever being devalued again. And what that means is lower borrowing costs for those countries, that doesn't have to pay a risk premium anymore for a currency that did no have much credibility. And so, for these countries it seemed like a pretty good trade-off. You give up some sovereignty in terms of your monetary independence, but you gain, you buy in the credibility of the stronger members. And therefore the lower interest rate that you have to face. 
	Now, as I mentioned there were a lot of risks from the beginning. Because economic integration was not complete. There was a risk that the shocks in a specific country would go unaddressed, and that they would lead to persistent deviations in employment and growth across the Union, which would ultimately pull it apart. Countries still had one degree of independence, important degree of independence, which was fiscal policy. They still had completely control over tax and expenditure policies. But there was also some concern that some countries would abuse that independence, and that in the process of abusing it, in the process of accumulating too much debt, running too many deficits, the cost would be shifted onto the other countries. And how could it be shifted? Well, one way would be that governments would borrow themselves into insolvency and then have to call on the others to bail them out. Or that countries would be borrowing into the point where they would need the Central Bank to start buying their debt. And so, basically turning the deficit of one country into higher monetary growth and inflation for the whole Union.
	So, there was a great deal of concern about these possible spill-overs. So, how do you deal with these possible spill-overs? Well, the ideal solution would've been to create a fiscal sharing mechanism by basically delegating to a central entity, a European fiscal policy, the task of stabilization. And that means transferring some tax revenues, national tax revenues, to a supranatural entity, which would then redistribute them as countries need them to stabilize their own economy. 
	This is a system of fiscal solidarity that essentially underpins the U.S. economy, and makes it possible for regions with different economic structures to function under one currency. When one state undergoes a specific economic shock, let's say an Oil Glot in Texas, tax revenues from Texas would contribute less then transfers from the federal government to Texas. And there is an automatic stabilization that goes on through that mechanism. 
	The problem was that in Europe, national governments had been willing to sign up to a currency union, but they were not at all ready to see fiscal responsibility. They were not at all ready to give to a central authority the right to collect taxes, and to spend on behalf of the whole Union. And so, a compromise solution had to be found to make this work. 
	And the compromise solution was that, yes, the countries with the better policy record, the ones with the policy credibility, they were willing to share with the others. Let's say Germany, the Netherlands, they were willing to enter into the Union. But they were wanting to extract out of the weaker members, those that had not shown much fiscal discipline in the past, some sort of commitment that they would not undo the whole thing for everybody. And so, the compromise was what is known as the Maastricht Framework, which was based on two principles. First of all, a specific ceilings on how large deficits could be. The ceiling was 3% of GDP. A commitment to redress the situations when those ceilings were violated. So, through a mix of sanctions and a mix of corrective actions, obligation that members engaged in. And there was also a rule about the level of debt. The level of debt should be, should converge to 60% of GDP, over time. 
	There's nothing magical about the 60%. I mean, I think no economist can ever tell you what is the right level of debt, but it was more of a political compromise. The other aspect of this Maastricht Framework was an explicit promise or explicit commitment that no country would bailout another country. So, if after all, if despite these rules countries misbehaved, they were on their own.
	The no bailout clause also worked ina a sense that by announcing that, the expectation was that if countries began to misbehave and over borrow, the markets, knowing that nobody would bail them out, would intervene and would extract some form of discipline. Notably by expecting these governments to pay higher interest rates or in the end just stop lending to them. From the start, this was not a very strong construct. Some countries, Greece, Italy for instance, entered the Union with debts that were much, much higher than the 60%. So, the expectation is they would bring them down, but that would've taken huge efforts. And also, as the table shows, and I'll go through it quickly, countries were really moving in and out of compliance of these fiscal rules from the very beginning.
	What you have here is, in green all the deficits that fall below the 3% ceilings, and in red the situations where those deficits exceeded the 3% ceiling that was supposed to be the framework that held the whole Union together. And what you see is that even before the crisis, countries were not observing those very rules, including Germany and France. Maybe for good economic reasons, I mean, that is not so much the issue. There must've been very good reasons, cyclical reasons, why you want to have higher deficit. But nonetheless the rules were flouted, and I think it is fair to say that from that point on it was clearly understood by everybody that those rules were more suggestions than explicit rules. 
	As I said, even without rules, the fail safe was that okay, governments may not observe the rules, but in the ned the markets would cut them out from borrowing if they really act irresponsibly. But did market discipline work? Here, I think what is interesting to look at is the following chart. So, here what we have is on the horizontal axis, the tenor interest rates on sovereign bonds before the Euro area came in to be. And on the vertical axis you have the net international position of the countries of the Eurozone. So, the net international position is essentially whether the countries' are net creditor or net debtor visa vi, the rest of the world. So, you have Belgium, top left country, with a positive debt investment position of what, let's say 40% of GDP. So, Belgium a big net creditor country. And at the other extreme you have, I don't know who's that. There's Greece and Spain, I can't tell the flag. It might be Portugal, down being a net debtor of nearly 60%.
	And what we see is that the market was pricing these risks appropriately. I mean, as you would expect. The bigger your exposure, the bigger your net debt position, the higher the interest rate you should be paying on your debt, because you carry bigger risks. Now, what happened when the Euro area came into play. 
	Some of you see, that the markets started treating all these debts as essentially interchangeable, as equal. Now, as we said earlier, some degree of interest rate convergence was natural, because after all the less credible countries, by giving up the ability to move their interest rates, were supposed to gain in terms of credibility and therefore should've been paying less interest rate. But the fact that there was so little difference in interest rates suggest that either the market believed that those differences would be reabsorbed over time. Those differences and risks would be corrected. Or that the no bailout clause was not going to work. Or just simply did not know what they were doing, but essentially there is a bit of a conundrum as to this huge market reaction.
	What we see is that the situation over time, so what happened over time in these relationships. Well, what you see is that even as countries moved further and further apart in terms of their Net International Investment position, that is, the debtor countries got into more and more debt, and the creditor countries, well, they stayed pretty much grouped at the top. Even as this process of divergence was taking place, which fundamentally means there's something unstable about the Union, the markets were still treating all these debts as one single interchangeable debt. 
	So, from the countries' point of view, clearly the incentives were not really there to respond from market signals to this difference. Now, it's in 2011 that markets suddenly came to realize that some debts had grown to unsustainable levels. And at that point, there was a sudden reaction these unsustainable levels meant two things. Either total bailout or some countries would have to exit. They would have to default on their debt and exit the Eurozone. And clearly in the beginning it wasn't clear, which of those two paths were going to be undertaken. And that's when ... This is right before the Euro area crisis erupted, but when the markets started figuring out that the situation was completely unsustainable, that you see finally interest rates reacting very quickly. And some countries having to pay suddenly, very high interest rates. And this is very high interest rates and soon thereafter being cut off from the market altogether. 
	So, again here, the question is why did the market wait so long to react to these differences? I think there are very different interpretations. One is there was a suspicion that in the end the bailout would come, and that is in fact what happened. In 2011, faced with the prospect of a complete break-out of the Eurozone would've been caused if countries like Greece and Portugal had defaulted on their debt, the creditor countries came in and bailed them out. Provided loans that the market was no longer willing to provide. 
	So, until now the narrative has really been about the lack of fiscal discipline bringing down the Eurozone. But in fact, I think there was another lurking risk that went unrecognized and then probably played an even bigger role in the crisis. And that was the accumulation of private debt. So, the whole fiscal framework had been arranged so as to minimize the risk of governments acting irresponsibly, but nobody really thought about the private sector acting irresponsibly. Because after all, private debt between a debtor, private debtor and a private lender will work itself out. And people know what they're doing. 
	But in fact, much of these differences that you see in the Net External Position of countries are due to debt accumulated not so much by governments, but by private sectors. And one good example is Spain, and another one is Ireland. Where household and developers loaded up on that cheap debt, to finance housing booms, well beyond what was sustainable or rational. And why did they do so? Because as I was showing earlier, they were able to access funds very cheaply, and moreover, after the currency union, the banks got into the game big time. Because after all they could all in the same currency, collect savings in one country, in a surplus country and lend in a deficit country, all in the same currency, without much of a problem. So, the banks, obviously also played the role in accelerating these imbalances. 
	How did these private imbalances become public imbalances? Again, the theory would've led us to hope that private sector mistakes are played by the private sector, but in the end faced with the risk of a financial collapse many of the banks proved to be too big to fail as in the U.S., and had to be rescued by governments, which means more public debt in exchange for private debt. And another way in which private problems became public debt is that countries such as Spain that entered into very deep recessions, saw tax revenues come down and essentially had to borrow or increase their own debt to sustain economic activity that the private sector had been rushing out of. 
	The genesis of the crisis was very similar to the U.S., again I think a deep failure of financial markets to allocate capital responsibly, and a failure of supervision, which led to the transfer of private liabilities, private debt, onto the public sector. Now, faced with the prospect of a breakup of the Eurozone, as we saw, the interest rate skyrocketed in deficit countries, insolvency was exposed. And all of this, the narrative until here is very similar to that of the U.S. The difference is that unlike in the U.S., in Europe or in the Eurozone there was no common framework on how to respond to the banking crisis, and there was no common framework to conduct counter-cyclical policies. So, there waws no common framework to provide fiscal stimulus, to sustain public demand as private demand was collapsing. Because those very governments, where the output was collapsing, were being cutoff from markets. Had to borrow at exceedingly high rates. And there was no supranatural entity willing to lend to them. And monetary policy response was somewhat hesitant also, because under the no bailout clause, it wasn't clear that the European Central Bank had a mandate to buy out great debt. I mean it would've had a mandate to buy out great debt in the normal course of its monetary operations, but under crisis that could've been perceived as a bailout. And so, it was not really within its mandate. 
	Yes, we need to go to the slide. So, this is why O.B.C. in Europe as a whole, and this is been sort of one of the mainly reasons why European policy makers have been attacked, is that in the midst of a crisis we see fiscal policy turning very, very contractionary in Europe. Unlike the U.S., you see basically 2012 and 2013 deficits, structural deficits corrected for the cycle, but still a good measure of the degree of fiscal stimulus. Deficits being reduced by nearly 1.5% of GDP. So, a huge contraction from the public sector at the same time as the private sector was contracting. And this in 2012 and '13. And again, when you look at this you obviously say this is very poor policy making. This is exactly what the Great Recession taught us not to do. But as you look more closely, it isn't that I think nobody understood it to be, is that people found themselves into rules, into an absence of a framework. And rules and behavior that made it very difficult not to do the bad things.
	As I said, as governments were trying to reduce their deficits because the market was not lending, and also because they thought by reducing deficits they would regain market credibility and finally they would be able to borrow again. They were also faced with the cost of bailing out the banks. And finally they were also exposed with the fact that the very countries that had borrowed extensively and were now in crisis, had in the process also lost a lot of competitiveness. So, there are countries that had high debt, failed banks, need to bailout the banks and had in the process of the pre-crisis period had led their prices rise much faster than productivity would have justified. And so they were suddenly in a situation of very low-growth potential. Precisely when they needed to grow out of their debt.  Yes?
Speaker 2:	The figures, so that's different countries' policies aggregated to-
Edward Gardner:	This is the Euro area. The Eurozone aggregated together. 
Speaker 2:	Okay.
Edward Gardner:	That's right.
Speaker 2:	So, could you give an example of a policy maybe that's represented by the interaction?
Edward Gardner:	Yes, I mean, one good example is Greece. Greece, Portugal, Ireland, basically all the countries that suddenly nobody would lend to anymore. Or when the market stopped lending the International Institution, then the European partners had to lend too, but we can discuss more, but then the question becomes how much you lend and how much you ask them to also make an effort to reduce their borrowing need. Or how much are you willing to lend to help them out of the crisis without that becoming a permanent feature of their system. So, it's a problem of incentives that was at play here. 
Speaker 2:	So, lending between the countries is one of the things that contracted perhaps-
Edward Gardner:	No, lending between countries is what replaced the market. But the problem is the amount of lending between countries was probably not enough to prevent a contraction of these deficits. I mean Greece was running deficits of close to 10% of GDP coming into the crisis. So, when the market stopped lending, the option was to go from ten to zero, which would've been a massive fiscal contraction. Or to borrow from other member countries and the IMF and others, and to bring that deficit down more slowly. But still bring it down over time, because obviously lending to sustain a 10% deficit is not sustainable. 
	So, the is the accumulation of all the countries. But even countries like France, who normally have a very good credit rating, and could've borrowed at very low rates were relisent to start borrowing excessively because the whole construct was built on the notion that you observe the rules. And if one country doesn't observe the rules, then there's no solidarity and then there's no Union. So, in a way the lack of an understanding of what needed to be done ... It's not just a lack of understanding what needed to be done, but there was also this constraint that the only thing that held people, held the countries together was the respect of the rules, even if they didn't make economically the most amount of sense. 
	Let me try to wrap up a bit so that I can leave some time for ... Develop some of these questions. As I said, Europe is now slowly coming out of this. There've been a number of progress in a number of areas. What we've seen is the fiscal rules still are there, but they've been made a little more flexible. Monetary policy has finally gained the support, the political support to go after more aggressively the need for monetary easing. So, there's been quantitative easing, buying out a public debt. And this gives you an example of what's happening on the monetary front. Here we have the ten year yield for France and for the United States and Germany. And you can see clearly the impact of much more aggressive monetary easing at the level of ECB. 
	The problem is until recently, is that yes German rates were coming down, but rates in other countries, the ones that were really hit by the crisis were still not coming down. And that's because after the crisis, despite monetary easing, the private sector was still very leery to lend to these countries. But more recently we see, even in Greece and Spain and Portugal, interest rates coming down. And one of the also favorable impacts of more recent monetary easing is that this has translated also into a considerable depreciation of the Euro, which means more competitiveness for the Euro globally. More ability to export and to grow out of the crisis. 
	As I said, there are some positive signs, but many of these institutions that were lacking, and did not permit Europe to engage into what would've been an optimal policy response are still not there, and need to be built. And so, what are these institutions? First of all, given that Maastricht Framework of budget rules and no bailout clearly did not work, the only permanent way of making the monetary union work or the currency union work is to also transfer some of these fiscal responsibilities to a central unit, which could act in the interest of the whole union, but also could act with some assurance of responsibility.
	The problem is that there is yet very little consensus among European countries of how fast this process can go. There's a lot of mistrust at the moment. And for countries to delegate some of these responsibilities that trust has to be rebuilt. The second aspect is, and we didn't spend much time on this, but one of the thing that has failed completely is that financial integration, which was working so well before the crisis, has essentially receded completely. And the reason is that, let's take an example, you know a French bank collects deposits in Italy and on lends those deposits to an Irish household. When the Irish household defaults, who pays?
	Well, the French bank has to pay. If the French bank doesn't have enough capital, it's the French government that has to pay. And if that isn't enough the Italian depositor has to pay, and then the Italian state has to reimburse the Italian depositors. So, a problem in one country spreads in a way that's very uncoordinated. And as that happens, all governments are going to try to keep their banks from engaging in cross border operations. And so, the very principle of a monetary union, which is free flow of capital, gets compromised.
	So, one key element that still need to be built in Europe, is a common framework for resolving banks and for insuring depositors, so, that no single government gets laden with all the cost. Well, let me skip this last one. It's not too important. 
	I would know, this one is pretty important, reinforcing market discipline, yes. I think this is a debate everywhere including in the U.S. How do you enforce better market discipline? How do you resolve the too big to fail problem of banks? Well, the solution has been to force banks to get rid of the most risky activities, and also to require them to have much bigger buffers. So, that before going to the tax payers, they have a whole host of other ways of addressing the problems they face. 
	In moving all this process forward, and I will stop here shortly, I think as I mentioned, the debate in Europe remains very acrimonious. Maybe most obvious of all, is the debate over austerity. Austerity, what austerity means and deficit rules. And you have two side of this debate. Of course, one side from an economist point of view, from an economic point of view, the view is that European policy makers did not react appropriately. They forced countries into contracting, when really they should've been expanding. And in so doing, they only made the crisis worse. 
	The other view is that it was excessive debt that brought the crisis along that nearly destroyed the Union. And by allowing countries now to borrow more and to run bigger deficits, you're only validating the behavior that nearly created the unraveling of the Eurozone. So, these two narrative are out there, and there's a need to reach [inaudible 00:45:13] and to create some trust between creditor governments and debtor governments, so that those institutions can be rebuilt. 
	So, in conclusion let me just sort of quote words by Robert Truman, not the musician but one of the architects of the European Union, who in 1950 when the first European Coal and Steel Community was put together, which was the embryonic unit that later developed into European Union. He said, "Europe will not be made all at once or according to a single plan. It will be built through concrete achievements, which first created a defacto solidarity." And so as difficult and disruptive as the crisis has been, I think European countries, for all the difficulty they've had in responding to the crisis, they have shown a degree of solidarity that has salvaged the Union. But there's a lot more work to be done. And I think a lot of the work is now the work of economists to show the policy maker what the right thing is, but there's a huge amount of political work here, too, for political leaders to show to their electors that countries are going to be better together than separate. And so that's a whole other dimension to this exercise. But lest I run out of time, I probably should stop here and take questions.