What Old Europe Can Learn from New Europe

This week's The Economist features two articles on Eastern Europe or--as I prefer to call it--New or Central Europe (geographically speaking the notion of Eastern Europe is just plain wrong, given that most countries in the region are smack in the center of the continent. I am also loath to propagate the ill-conceived Western European bias, where any country beyond Germany is considered "Eastern").

Both articles argue that Old Europe, and in particular Spain, Portugal, Italy and Greece, could learn a lot from New Europe as to how to take hard economic decisions and move forward. I could hardly agree more.

The Economist also talks about how quickly the mood about New Europe can change - it was only a year ago when Financial Times ran a famous headline "Eastern European Subprime". Now, New Europe is hardly a problem anymore and some of the countries in the region, primarily Poland, are perceived as unmitigated economic stars.

Back in early 2009 some people saw the irrational hysteria and argued against it. That includes Prof. Rybinski and me, when at the height of the crisis in February of last year we argued that "there was irrational exuberance about Central and Eastern European sovereign risk". As it turned out, we were 100% right.

Interestingly, neither Financial Times nor Wall Street Journal wanted to publish our text then (we ended up publishing it in Eurointelligence). Was it because it was just not in line with the gloomy editorials?