The bank runs in Cyprus have reminded me that we euro doomers have been repeatedly wrong over the last few years: the euro still lives (and thank goodness!). Let’s hope that stays true, because the last thing we want to see is radicalism spread through Europe.

For what it’s worth, keep in mind that currency crises are extremely rare events in the developed world — or at least they’re supposed to be! If the euro collapses even 20 years from now, we should consider that a huge failure of current policy. I don’t think we’ll need to wait 20 years, but hey…

The real world plays out a lot slower than what we (or at least I) imagine in our heads. Something I’ve seen referred to as Dornbusch’s Law:

The crisis takes a much longer time coming than you think, and then it happens much faster than you would have thought, and that’s sort of exactly the Mexican story. It took forever and then it took a night.

He’s referring to the Mexican financial crisis in 1994.

I used to tell something similar to my friend Jessica every time we’d argue over political change: freedom takes time, I’d say, but when it happens it happens suddenly. I was telling her not to be cynical about what seemed like little progress in the world.

She never got to see Tunisia, Egypt or Libya. But she still owes me a coke.

 
(HT: Paul Krugman)