‘The real game’s not over here’ – Lou Reed
What is the main thing driving the urgency of a solution to the euro crisis? Why, the financial markets, of course. Not because they should be calling the shots, but just the obvious reason, that you need to keep them on board in times of crisis because, if not, in that water there are sharks who will kill you. That is the way it has always been, from the South Sea Bubble to the current crisis.
First of all, there was the summit, which had the UK media, not to mention those in Europe and across the world, in a frenzy. But not about the dismal failure of the summit to agree a credible package to save the euro. No, a much more readable story was Cameron’s walkout and Britain’s isolation. But some softer voices, the business editors and the FT , made the point.
And then, not content with more than six months of wilful foot-dragging, German Chancellor Angela Merkel, on Wednesday, showed equally questionable logic as she broke the first rule of monetary management: whatever you’re saying, be bloody sure about it. According to the BBC , she said:
‘I am convinced that if we have the necessary patience and endurance, if we do not let reversals get us down, if we consistently move towards a fiscal and stability union, if we actually complete the economic and currency union… then what I have always stated as our goal since the beginning of the crisis will come to pass’
What did you say? In that sentence, there are four ‘if’s: count ’em. One, two, three, four. Talk about hedging.
If there are legions of traders, their fingers poised over the Sell button on their terminals in London, New York and Tokyo, what you do not do, what you absolutely do not do, is sound unsure. You do not if and you do not but. Because when you sound unsure, they sell. They sell, because they do not believe you and soon, the plunge becomes a self-fulfilling prophecy.
Unsurprisingly, the euro has touched an 11-month low.
Tony Blair understands this: he told the Wall Street Journal that governments had ‘a matter of weeks’ . Sadly, Angela Merkel, for whatever reason, despite the fact that you might intuitively expect parties of the right to understand this stuff, appears not to. Well she, and the other eurozone leaders, had better shape up: time is now very short indeed.
As they once used to say about a rather more important trans-European crisis: it could all be over by Christmas.
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Rob Marchant is a Labour activist and blogger who writes at The Centre Left
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Rob,
Unfortunately/forunately the world has and is changing at a pace the economists are struggling to understand and that has left the politicians far behind, and because they are servants of vested interests rather than leaders all they can do is rely on old dogma or flawed ideals no matter how tough and dangerous things become. Some countries accross the globe are exhibiting real leadership and are pushing their economies forwards with all the necessary upset and argument that goes with it within their democratic institutions.
Whereas here in the UK the arguments upsets reside mainly outside of Parliament as the consensus of Corruption remains dominant though the lobbyig argument has begun (not all lobbying is bad but it is right to be brought forwards for open debate) and should be placed alongside the funding of political parties rather than as a seperate issue.
The core issues of the European economies will remain and there are no signs that a big pro-debt massive stimulus will address these issues because they are merely part of a series of Global Economic imbalances. I can list twenty off of the top of my head. But you very kindly remind me of the length of my comments so i shall try and be succinct.
The growth led ideas in economics have long been questioned and the current environmental narrative based upon the arguments surround greenhouse gasses are also failing, in addition over population of the human race is also a real problem along with resources. The casino sadly is still open as Corporate bodies are seizing what they can with China the Super Power dominating without fear of diluting its National Interest (I am not blaming them simply ststaing the case as most of us know it). The European model is appallingly unsustainable, dangerous and has become so because the wider interests of the majority have been abandoned in emulation of the flawed US model that can only lead to civil unrest hence the recent legisilation put forwards by the Senate as a pre-emption of this.
There are some good signs as some in the finance sector are (thank heavens) frequenting planet earth and have taken on board the dire consequences of what has occurd, however I remember politicians in Clintons time in the US asking the Finance Sector to make housing available to the poorest which is where this trouble began. Ironicaly with a good intention. The Finance Sector did precisely what was asked of it in the name of “aspiration”.
I do not like what has happened but it’s important to remember where the ultimate blame lies, and that is with the lawmakers.
Blair wasn’t about to question the power of the Finance Sector because he wasn’t stupid. But it was and still remains a fundamental failing of democracy to prevent anybody having too much power whether it be Global, National or your local Council it always ends in tears. Worse still the people have a complete aknowledgement of the decline in democracy which will be accelerated under the plans of Merkal and that is a real danger. Fiscal responsibility and balancing your books should be a given (and usually is in the UK) regardless of your political party. But reigning this in when the debt has been at the very least, contributeted to by the private sector Finance sector that gives politicians cushty jobs (in the words of Del Boy) as well as poor financial management by some countries and you are pouring oil on the flames.
The danger for me is not actually with Greece though things can change here, but with those les enthusiastic about making sacrifices and I am thinking about the more affluent people in Germany and France. They have seen what has happened to the middle class in the US and will be very cautious indeed in following Merkal no matter how much she plays these games and are less likely to be sympathetic. The bigger blow to their faith and which will feed the fear is of ourse Italy and Spain. It really rests on them and as austerity is pushed on people paying the price for a delusion of elitism by the politicians, democracy will be needed more than ever but as I said politicians are regressing and cannot cope with what is occuring their political “careers2 of satisfying their real masters had nothing to do with real Leadership and crativity and heaven forbid…working for a living and having to make sacrifices for their people….
What a radical notion!
Have a lovely Christmas fella and a Happy Hanukkah!
Ralph, you may well be right that the world has allowed private capital to have too much power relative to governments. But the reality is that you need to take account of it in any case (although I don’t think this is incompatible with what you’re saying).