Life has been treating me well recently (summer is coming, I have a new business venture to concentrate my mind on, several people have commented that I have “lost weight” and family members have recently visited me) and it hard to imagine things being much better (save for a Victoria’s Secret model calling me for a date – I am free on Saturday by the way…) but despite this I feel as though I have little choice but to be negative about Europe.
The push and pull of internal politics at the highest levels makes unpleasant demands on a politician. Whether a politician truly believes a thing or not almost becomes an irrelevance. He or she has to say a thing in a situation simply because that is his or her role. To do otherwise could cause untold harm.
As an example, I am sure that when David Cameron had to opt out of the now seemingly worthless fiscal compact in December he felt awful. But that was his job. By saying yes to something he had to say no to something else. I presume he believed in what he was doing, but whether he did or not is largely irrelevant. He was doing what he had to do for the people and interests he was representing.
Why do I bring this up?
Over the last few days Italian Premier Mario Monti has been causing some trouble for Spain’s Mariano Rajoy. He has been doing this because he needs to protect Italy and having another scapegoat for the markets probably seems like a nice, neat solution. In France, Nicolas Sarkozy has also been picking on Mr Rajoy. This is to help him seem populist as he struggles in the polls ahead of a tough election. To alter a well known phrase, “It’s only politics”.
It is easy, of course, to kick a man when he is down and let’s be clear, the Spanish economy is off the ropes and onto it’s knees right now. Poor Mr Rajoy picked up a very heavily poisoned chalice when he won in December. He could do an absolutely brilliant job in his time in office and things could still go horribly wrong. Correction. They are going horribly wrong.
Everyone is worried about Spain. There simply is not enough money to bail them out if required, as Wolfgang Munchau has recently suggested. He takes the matter further, pointing out that the crisis resolution mechanisms are still not in place. He has been right about so much in the last three years that it seems churlish to doubt him now.
This is the European dilemma. The pull of national policies and politics against those of the community. It seems impossible to imagine that this contradiction can ever be solved without true federalism which is anathema to many (including me). By having to constantly focus on either building a consensus or doing whatever Germany insists upon, the eurozone crisis limps along with no resolution on the horizon.
Clearly, at some point, countries will need to start leaving the eurozone. Everyone involved in the crisis must recognise that by now, but the longer this inevitability is postponed, the costlier – economically, financially and socially – the price we all need to pay becomes.
As I read about European leaders picking at each other for the sake of personal or national benefit while the rest of the continent burns around them, it is difficult to imagine anything but a terrible collapse for the whole eurozone. As a very well informed friend commented to me in an email today, “This sucker is going down, hard. What’s still up for grabs is whether denial and lengthening the process will make the social unrest worse or much worse.” I personally fear that Europe will find itself in a place where it is essentially bankrupted for decades to come.
It is hard not to be negative when you are worried about that.financialguy