Tuesday, July 24, 2012

Italy Wants a Signal

As I said in a previous post, the euro crisis is coming to a head. Italy wants a "signal" from "Europe" that it will stand by commitments made at the recent summit.

ROMA - Per Corrado Passera non c'è più tempo. "Un segnale lo deve dare l'Europa. Ed è ora che lo dia". Sia per tranquillizare i mercati che per raffreddare lo spread. Così il ministro per lo Sviluppo Economico, a margine di un'audizione sulle ecomafie, ha risposto ai giornalisti che gli chiedevano un commento sull'attuale situazione economica dell'eurozona.
But who speaks for "Europe"? And what sort of signal will it take to calm the markets this time? La Repubblica seems to think that "Parigi" is standing with Italy:
Parigi, Roma e Madrid: "Attuare impegni"

But "Parigi" is speaking softly, if at all, and not carrying a very big stick, as far as I can see.

UPDATE: See Trisha Craig's comment on the regional contribution to the woes of Italy and Spain.

1 comment:

Mitch Guthman said...

I think at this moment it is Angela Merkel who must speak for Europe. Germany is not only the economic engine of Europe, it seems also to be in total control of economic policy. Throughout this crisis, Merkel has been at the helm of Europe. The errors of judgment which have brought Europe to the edge of the abyss where largely those of Merkel and Germany. Germany’s unwavering commitment to “expansionary austerity” (even as it became clear that austerity was driving Europe’s economy into a ditch) and its inability to recognize that the failure of the ECB to function as a normal central bank are the two critical factors that have been driving this crisis all along.

Also, it is now becoming clear that, as I and many others have predicted, the euro crisis now finds it way to Germany because no country can be an island in a sea of fire. The crisis is now beginning to effect Germany and the other Northern countries in the eurozone as the effects of a prolonged period of falling demand start to be felt in Germany and as fear of “euro contagion” and the apocalypse likely to accompany it become more “rational” considering what seems to be Germany’s deluded belief that it can simply ride out the crisis. I believe this is the meaning of Moody’s action and their strong criticism of the “reactive and gradualist policy response” by European leaders. The failure to get ahead of the crisis and put clear, workable plans into action means that there is simply nothing more that anyone can say that will calm the markets for more than a few days.

As I say, Merkel bears much of the responsibility for looming disaster because of her constant dithering and unwillingness to change course once it became clear that Europe was headed for the rocks. But it goes well beyond Merkel herself. The failure of the German political and economic elite is simply staggering. These people are simply increasingly detached from reality. They began by telling us there were no rocks; then there were a serious of fatuous plans to avoid the rocks but without changing course and now we are told by German Vice Chancellor Philipp Roesler, surely the poster-child for lunatic self-denial if ever there was one, not to fear running aground on the rocks because the German economy is indestructible. Much, one supposes, as the Titanic was unsinkable.