This weeks two-day European summit is the latest in an apparently everlasting series of make or break Eurozone meetings. Plus, it’s another chance for those two unlikely pals – a German Fraulein and a French gigolo, who also happen to be the French President and the German Chancellor – to have a poetic Press Release love-in:
- Blame the Greeks and British
- Appease the Americans and the Chinese
- And then pitch a vision forward….
But essentially leave out all the key nitty-gritty details that your listeners actually want.
The world economic crisis can be laid squarely at the door of the American banks which created assured financial products out of unpayable mortgage loans, and the government regulation that managed them. But the rot in the developed West as we now all recognise went further, faster and deeper than we suspected in 2008. We had this confirmed this week when one of the key architects of the Euro – left-wing French socialist Jacques Delores – admitted that some countries that were allowed into the Eurozone should not have been. When a French socialist agrees with Wall Street, we know we are in trouble – deep, deep trouble!
So what are MerKozy doing to solve this? Getting the Eurozone countries inline and within budget? Ah, no, that’s a subject that they disagree on. OK, well agreeing a lender of last resort? Ah no, that’s a subject that they disagree on. How about agreeing those nitty-gritty details on the way forward then? Again, that’s a subject on which they disagree on.
So what can two politicians who both face key elections or re-election in 2012 agree on? Ah yes, bash the Brits and play politics. That’s something on which they both agree.
Here’s the Eurozone problem in a nutshell: the German tax payers and pension funds of the states of Germany are presently either keeping the Euro afloat, or are so heavily invested in Eurozone debt, that they are faced with a double-edged dilemma. If they stop pumping money in, then the Eurozone falls; and if they force countries out, then their pension funds fall into deficit. The market makers know this, and they are serially forcing the weaker Eurozone countries debts into unsustainable levels of interest. Portugal, Ireland and Greece have already been forced to take a bailout; now it’s Italy, next Spain. Plus if anyone of these countries defaults, then the critical cracks go back to either the French banks or those German pension funds.
So does the German tax payer have to keep paying? No, not when the Merkel part of the partnership has an election in 2012, plus her French lover also faces his own guillotine moment at the ballot box. So until they both get past the ballot box winner posts, better to fudge the details and agree on something, but what? Ah, back to bashing the Brits….
Mean while, in Westminster, PM Dave has a problem. No, it’s not his Lib Dem partners, or even the economically naive red lot with a 13 year track record of spending stupidity on their CV, who happen to support him in the last EU vote. It’s his own right-wing Tories, and a blonde bloke presently resident on the Thames, who himself has a problem keeping both his tongue and his manhood inside his trousers: anyone seen the latest moppy blonde, blue-eyed, scruffily dressed and super injunction suppressed love child?
Like many political commentators, I actually think that Cameron has a far easier job to do this week than his press statements and guest articles in various tabloid and broadsheet columns suggest. He is right to come out and state his position publicly – it’s for his own Tory detractors. But really, I can’t see how his position can’t be defended: hence why most conclude that he won’t need to veto any EU treaty proposal.
But the reason that Cameron needed to come out and say something was because Merkozy can’t agree the details of any hard-to-swallow debt pill, until post their 2012 elections. Inside the Eurozone, while Germany wants central bank control of in-country finances; France wants in-country control of country finances, with simple reporting back to the central bank. In other words, the French want the same system kept in place that created the current Euro crisis, but with central bank – ie, German tax payer – backing. No wonder Merkel gave him the cold-hearted love pillow on that one, and snapped the pride of his tailored lederhosen.
So what have Merkozy agreed on, and hence come out with pre-summit? Ah yes, back to common fiscal control, the financial transaction tax and common EU employment laws. To any trader sat on Wall Street, in Hong Kong, or about to receive a million pound annual bonus in London, this is at earliest logical step3 in a process of Eurozone reform. Step1 would be to get the current crisis (ie: Italy) solved, then sort out common Eurobonds and bank control, before worrying about the EU at the 27 level. But those first two steps are too hard to address, let alone agree on, let alone create sweet music to their own voters. So back to bash the Brits.
The 2008 global financial crisis was created by bankers, and like many I am still not convinced at all that the bankers have yet paid the price for their sins then, let alone now getting “all in this together” with the rest of us. However, it’s the politicians, and particularly Merkozy who are now extending this crisis on a daily, if not quarterly basis.
Here’s the answer. At some point in time it’s swallow the nasty debt problem pill. It has to happen, just a question of when – sorry German tax payers and retirees. To think that it can be delayed until after the 2012 elections in Germany and France is just pure lovers fantasy. So before the Spanish face their day of reckoning in the bull ring, and another Euro crisis has to be addressed – and possibly this time not averted – its time to sort steps 1 and 2. The 27 will by definition and economic trading logic support the 17, but until the 2 get on with the required action in the Brussels bed, there will be no easy climax to the Euro crisis. No one could accuse them of coming too early, in fact its a case of too little, too late. In summary, what a presently unpleasant fiscal damp patch.