Human beings go through a number of stages when confronted by a major change such as today's Crisis. As first described by Elisabeth Kübler Ross, the process starts with:
• Denial that any change is taking place
• Then Anger at the implications of the change
• Bargaining to reduce its magnitude
• Depression as reality begins to be confronted
• Finally Acceptance of what has happened
Last week's EU Summit reinforced the blog's belief that Kübler Ross' work is a good guide to the evolution of today's financial Crisis. It seemed to mark the end of the Denial phase amongst Europe's political elite.
For the past 20 years, they have been in the 'same bed, (with) different dreams', as Reuters' Paul Taylor described it. Germany has wanted to push ahead with fiscal union, whilst France has argued to retain a key role for nation states. Foolishly, they pushed ahead with the euro project without resolving this key issue.
Along with other world leaders, they then went straight into Denial mode when the Crisis began. As the blog noted in April 2009, the G20's London summit failed to agree "a contingency plan, in case the global economy does not begin to recover". Instead, they increased debt levels via massive stimulus programmes.
Fast forward to today, and there are few excuses left. In Europe, the leaders had been able to blame Silvio Berlusconi, the former Italian leader, for lack of progress. Now he has gone, the UK's David Cameron has taken his place.
Of course, the UK played its hand in the negotiations very badly. It is never clever to stand laughing outside your neighbours' house whilst a fire burns. And it was particularly stupid not to check whether the wind might soon blow the fire in its direction.
But that is really a sideshow. What is clear is that EU leaders are no longer in Denial mode. They have moved on to Anger, and want to blame someone for their mistakes.
This could have major implications for world trade, as the chart suggests. Angry politicians faced with mounting job losses amongst their voters will find it very easy to blame other countries for their own mistakes.
Companies need to monitor political developments very closely indeed over coming months. Protectionism may not be far away.