Monday 26 September 2011

National Politics of the Bailout

Breaking news everywhere that at last a major plan for a Euro area bailout is coming together, a mere year after one was urgently needed. Perhaps the most interesting part is the role that the politicians of each nation are playing:

America - Led by Tim Geitner the US has performed its cavalry role. Coming up with the idea of leverage to help increase the EFSF bailout fund and to knock the heads together at the G20 to push forward a solution before the world markets meltdown in the abscence of any leaderhsip. Stereotypically, America provides leaderhsip and clever thinking, althought this time no money....

France - The IMF leader Christine lagarde if French, unsurprisingly she has been very down on the chances for the World Economy in recent days. She knows that France has the greatest exposure to Greece and unlike the Head of the Bank of France knows that, Common Agricultural Policy style, the only thing that is going to save France is tying everyone else into her future and getting external funds to assist.

Italy - In Berlusconi they have comedy leader of a comedy economy. Run by a mix of mafia and state backed businesses, the people have little chance of being successful entrepreuners - instead the girls queue outside the presidents office. Farcical and sad.

Britain - Not being in the Euro allows the ususal position of commenting from the side, whislt also knowing that our own economy is so weak that not finding a solution will condemn us to an even grimmer future than we know about. At least our downcast politicians have a grasp on reality, thanks to the death-experience of 2008.

Germany - The pride of leading Europe has now given way to a continual estimate of the costs of this leadership. Merkel and others come out badly, refusing to give to anyone else whilst running their own surplus, berating everyone else for not being German. In the end, all rests with them committing Germany either to fund the saving of the Euro or to walk away to a rerun of the late 1930's.

I find it both re-assuring and odd at the same time that crisis after crisis, the same national stereotypes play themselves out.


Budgie said...

Well, two trillion euros is a lot more to play with than previous can kicking. But so far the markets don't seem all that impressed.

Mr Ecks said...

Two million million is a year and a thirds entire output for the Germans--are they going to pay this and have more austerity(in the short term ) than the Greeks?--if not them who else is going to pay and with what? Printed funny money?. This is no solution, it is the apparatchiks of the 1000 year Reich absolutly desperate to save their empire.
We (UK) need to be out of there very quickly and any political scum or bureaucrat who stands in the way of that needs to gone very quickly indeed.

Z said...

The strategy appears to be preventing any one of the weaker countries being forced out. Strength in unity. Form a Laager and fight back the hedgie hordes.
If the Euro stands united it can't be broken.
But if a country is separated it will be killed. And then those trader/barbarians will be at the gates again, looking for the next weakest, and so on.

Letting Greece slip out of the union would not be the end of the Euro. In fact, the Euro strengthens with each sick and wounded country left behind when the wagon train moves off.

CityUnslicker said...

I am pleased there is at least consideration of a solution. Greece became a problem 18 months ago and this is the first attempt at any kind of a macro plan. It is of course full of flaws and unlikley to be a workable solution, but progress it is.

Old BE said...

Time for an ancient joke, I think.

Canada was supposed to be the ultimate country, a melding of the best features of its constituent peoples: British justice, French cooking and German economics. Something went wrong along the line and what the Canadians really got was British cooking, German justice and French economics.

Sean said...

Lets see now. Has the fundementals of the euro compact changed? This time its different ? Take the cash on offer and sell the mother big.

Here is a tip Z. Markets are mirrors. The euro mirror is seriously ugly... still.

BlackRaven said...

the issue is simple.

the periphery can't support the debt load it has.

on aggregate eurozone finances are ok. but for the core to support the periphery there has to be fiscal unity.

neither core nor periphery are prepared to accept the loss of sovereignty that comes with fiscal union.

there is absolutely no democratic mandate for the structure at present, and the institutions at the core of the EU are rotten.

Elby the Beserk said...

As yet, the question - out of whose pockets will this money come? - has not been answered. Or, it would seem, even asked.

I assume that this implies another major assault on the taxpayer?

And why is there no mention of the states involved having to OK it with their national Parliaments. In effect, a coup is about to take place.

CityUnslicker said...

Coup it is, since when has the EU been democratic?

measured said...

Is France still talking to Germany? Have they seen the Spanish elephant in the room? No offence meant, Spain. It is just an expression.

Anonymous said...

Greece should default, leave the Euro.

They will have done really well out of the EU. Athens has a new underground, a brand spanking new airport, loads of new roads. All paid for by their 'partners'. What's to complain about?

They should get out while they are still ahead.

Elby the Beserk said...


That would be the Elephanta of Castille, I guess?

measured said...

Rofl! @Elby the Beserk

Yes, all women and children to the lifeboat. Never mind an extragrande infanta might make it sink.