Francois Hollande: Is there a point to this bloke?
Germany 1 Italy 1
(After far too much time. Penalties to be taken by Spain & Greece)
Apologies if this reads like a cross between news item and opinion-piece, but many if us here in Europe are beginning to wonder where this mutual exhibitionist onanism between Berlin, Frankfurt and Rome is going to end…and when something practical to help EU citizens might start happening.
We are now at Friday afternoon over here (early-bird Americans are just getting up) and so far there have been no big-gun interventions from Mario Draghi in terms of either serious bond-buying or – more urgently – Spanish banking and regional liquidity. There are two simple reasons for this: Jens Weidmann (the Bundesbank version of Jurgen Klinsmann) keeps threatening to fall on his sword, and Angela Merkel keeps alternately egging him on and holding him back. My apologies to Jurgen for placing him unwillingly in this parallel: he has more native intelligence in his highly-prized feet than all of these unaccountable poseurs put together.
To the understandable boredom of veteran Sloggers, let me just reiterate the eurozone’s central problem: The Franco-Italian-Spanish axis wants to take the largest shovel possible, and empty the ECB via the EFSF in order to save itself; the Germans want everyone who opposes austere nihilism to do as they’re told and starve with dignity; and Mario Draghi wants to stabilise the eurozone by reluctantly accepting that disguised debt forgiveness plus currency-printing is the only option left.
Some would call this an Eternal Triangle, but I increasingly see it as a Bermuda Triangle: into which good ideas are fired, only to disappear in a cacophony of fruitless debate between deadly moralists, dangerous pragmatists, and parachuted Goldmanists.
I spoke to market opinion-formers earlier this week. None of these guys have changed their view: Spain needs help yesterday, isn’t getting it today, and – if the politico-banking axis gets its way – next week is looking doubtful too. The markets are wavering somewhere between dashed ECB expectations, Bernankerology divining on QE3, and growing fear of the Chinese deceleration. ‘Anxious’ doesn’t begin to describe their assessment of this grand-scale abrogation of responsibility stretching from Berlin via Brussels and Paris to Madrid and Athens.
The questions that need to be addressed as of this moment are:
1. Francois Hollande has just spent time with Spain’s Rajoy: is M. Hollande going to do anything to resolve the triangular traffic-jam, or is he going to do on the European stage what he has so far achieved at home – nothing?
2. Mario Monti has vented his spleen with Merkel, and been told to calm down and see if that bailout will really be necessary after Spain’s banks and regions have been saved….always assuming Jens Weidmann doesn’t have an epi. As with Francois Hollande, is Monti just going to huff and puff, or is he going to restrain himself and, with Hollande, wake up to the fact that Draghi has far more genuine help to offer than the Merkeschäuble?
3. WTF is Berlin up to? I mean, how long does it take to make two choices: first, fall in and cooperate as an equal member of the eurozone to solve its problems; or second, accept that Germany isn’t going to get its own way – and bugger off?
Memo to the Chancellery: to keep trotting out lofty moral fables, insouciant vetoes, hypocritical spin, tabloid hysteria, and trips to Beijing isn’t going to produce a good result for anyone. As the saying goes, sh*t or get off the pot.
There is nothing the US Establishment and media would like better than to load all the blame for Congressional inaction onto its increasingly inert EU counterparts. But if nothing unblocks this zero-sum eurozone pinball game, then be it known that disaster will zoom across the Atlantic faster than Concorde in its heyday.
Here’s why: we are within a few working days of serious bank runs, and the domino effects of those runs going unchecked. This really is the Last Chance Saloon for Europe, the US, and the global economy. Blind German ambition, weak central bank action, and Washington’s puerile political games can smile benignly going into the weekend if they wish. I can guarantee, however, that next week is going to break the urbane calm of Jackson Hole bigtime unless somebody beyond Mario Draghi wakes up.