 Eurocrash: you pays your money and takes your choice
Monday 3 September 2012
If you had wanted a boilerplate summary of events in euroland to read over the Sunday cornflakes, Ian Traynor in The Observer would have been a good choice.
Like the Wall Street Journal, Traynor believes there's been a "lull" over the summer and, in common with many other scribes, he buys into the split between Holland and Merkel, and the sanctity of the France-Italy-Spain "triangle".
However, no one outside a very small group really knows how much of this is theatre, or indeed whether Rajoy's protestations are wishful thinking, or active dissimulation. You can choose betweenBild or The Observer and walk away with any opinion you prefer. But them that really know ain't saying.
Predictably, Mr Traynor also believes it is going to be a very "hot autumn" for the euro, although he is somewhat late to the party. That phrase has been kicking about for a month in the German press and may have originated with Austrian foreign minister Michael Spindelegger in late July. Now the meme has been well and truly launched, though, the Financial Times has its John Dizard dismiss the idea. Many of us expected September 2012 to be the critical moment of the euro crisis, he writes, adding: "But no. The stage set isn't ready, the audience hasn’t finished taking its seats, and, not least, the box office hasn't yet brought in enough cash to pay the cast". Not least, he expects the Karlsruhe judgement to be an anti-climax, with the smart money having the court avoid an all-out veto of the emergency funds. Instead, it will impose "a set of detailed, intensive requirements for transparency and parliamentary oversight". Another milestone is the troika report on Greece, but that is not going to be chewed over until October, and a declaration of non-compliance and consequent formal suspension by the International Monetary Fund could be put off until November. With other delaying factors, Dizard argues that nothing significant might happen before November, keeping the eurocrisis off the agenda for Obama until after the presidential election. If the start of the eurocrisis can be taken as October 2009, when the Greeks 'fessed up to underestimating their current account deficit by a factor of three, then this will have the "colleagues" sailing past the third anniversary, smirking, "we're still here". Regardless of this, Ambrose suggests that "technical signals" are flashing amber. But these signals are blurred, not least by low volumes and high-frequency trading, the latter also having a significant effect. In the event, market intelligence - technical or otherwise - is just that. It is not a predictor of political intent. Currently, financial markets are driven by fear and panic, and are not behaving rationally. But, like sheep, they can be soothed and herded - and bribed. It is all very well, therefore, Mr Traynor writing of "foreboding in Brussels and other European capitals about what lies ahead for the euro in the autumn". But one could just as easily write of a new sense of determination that seems to be abroad. And, if the "colleagues" have been adopting delaying tactics to get them through to longer term solutions, they have succeeded beyond all expectations. Now, this may be a case of the man falling off an 18-storey tower block, calling out as he passes the 16th: "Alright so far!" But there are new schemes afoot, for instance the idea of launchingSonderwirtschaftszonen (special economic zones) in Greece, as a way of dealing with competition issues brought about by the single currency. Mary Ellen might thus complain about German phrasing, but no one should underestimate the determination of the "colleagues" to succeed. "Not all Germans believe in God, but all believe in the Bundesbank", Jacques Delors once famously complained. On Thursday, that belief is going to be put to the test, with a meeting of the governing board of the ECB. Ranged against the old religion is an untrammelled belief in "Europe". So far, the Europeans are making the weather – and the autumn may be cold and wet rather than hot. COMMENT THREAD Richard North 03/09/2012 |
Eurocrash: Spain's Rajoy speaks – in four languages
Sunday 2 September 2012
 Splits, of course, are the meat and drink of journalism, so when we have Bild am Sonntag interviewSpanish prime minister Mariano Rajoy – in the first newspaper interview since he took office eight months ago - one might expect the perceived schism between Spain and Germany to be fully explored. Significantly, though, this is not a straight two-handed interview, but one shared between four European newspapers. Alongside Bild is Le Journal du Dimanche, Corriere della Sera and the Spanish ABC. The British do not get a look in – although we do get a report in Reuters. In all four versions of the interview, though, what comes over is Rajoy's determination to convey a sense of solidarity and unanimity, with the man stressing: "In all material respects, agreement prevails between Spain, France, Italy and Germany". The quote comes from the Spanish newspaper, and in Bild we see the some thing. The interviewer tries it on, stating: "One gets the impression for some time that there is a triangle of France-Spain-Italy, while Germany takes a different course. Do you agree?" Rojoy answers: Europe will not be built without a consensus. If there was no consensus between the member states with the greatest economic power, it would be particularly difficult to deepen the European integration process. And I can assure you that in all material respects, agreement prevails between Spain, France, Italy and Germany.The French version has it slightly differently, asking of the personal relationship with François Hollande and Merkel. Despite that, the answer is essentially the same: "Europe can not be built without the consent of all, and especially countries with a higher GDP. The stronger the economy of a country, the stronger its logically competition and greater responsibility. But for the most part, we agree". Then, from Italy, we get the question: " … Europe seems split. On one hand, Spain, France and Italy. On the other hand, above all, Germany". And the answer doth come: There are coalitions. But we either proceed together or we do not progress. The responsibility for the European process belongs to all Europeans. But within this shared responsibility, it is certain that you can not move forward without the agreement with Germany, with the largest population and more consistent GDP.Reuters chooses to focus on the financial aspects, headlining: "Spain's Rajoy says euro zone yields not sustainable", leading on the prime minister's call "for decisive action to resolve the financial crisis in the eurozone and dispel any doubts over the future of the euro". The current situation in which some European countries financed themselves at negative rates and others paid "unsustainably high rates" had to end. There is a sharp contrast here between what the agency finds the most important, and the four newspapers. Bild headlines, "The euro can not survive without Germany". Corriere della Sera has "Madrid ready to ask for help already respects European conditions", Le Journal du Dimancheheadlines: "Rajoy: 'The worst thing is to not understand reality'" and ABC has "The 40 messages Rajoy sends to the Spanish in the interview with ABC" – one of three pieces. In four languages, though, one is left in no doubt as to Rajoy's commitment to European integration. He is "totally convinced" that the euro is irreversible and that it "remains an enormously good first project for all Europeans". He wants to send an unmistakable signal that there is no going back, but will wait for the ECB to make its decisions and then "make a decision that is good for Spain and the euro". Stressing that a euro without Germany would not be possible, Rahoy plays down differences between Merkel and Hollande. For sure, the French president wants a debt Union, but this is "only as the last step of a fiscal union". There is no fundamental difference between the two. As to when we might get this fiscal union, Rajoy reveals that Spain has recently sent a document to Van Rompuy with its ideas, arguing that it should be achieved in three stages. In the first stage, to be completed by 2013/14, member states take measures to meet the fiscal and economic convergence criteria, and any conditions imposed by the European Council. The next stage is the creation of a European budgetary authority, which will control national budgets, and also make recommendations to to align the fiscal policies of the eurozone. At this stage already eurobonds could be issued with medium-and long-term maturities, although the vast borrowing would continue to take place on a national level. The authority will be in place by 2015/16, leaving the third stage to be completed by 2017/18, when member states agree to binding budgetary targets for the entire euro area, with Community Union bonds issued to cover what was once sovereign debt. With that. Rajoy and Merkel are to meet next week, for yet another round in this interminable sequence of talks. The German Chancellor has a leading role in solving the urgent problems of the Euro and European integration, says Rajoy. But the responsibility is collective. Either we go down this path together, or we will all be set back. The best last words, however, go to Le Journal du Dimanche. Asked if we are now condemned in Europe to having governments seeking to combat the crisis only by renouncing their commitment to reforming the society, Rajoy tells us there is "something difficult to control called reality". If he ends up having to reduce the public deficit by €30 billion more than expected, with an increase in revenue and a decrease in spending, he must make decisions that he would rather not take and does not like. But, says the Spanish prime minister, "The worst that can happen to a ruler is not to understand the reality in which he lives". What is not explained is whether the "reality" in which Rajoy lives is the same as that inhabited by the rest of us. COMMENT THREAD Richard North 02/09/2012 |
Monday, 3 September 2012
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