Thursday, December 8, 2011

Merkozy a Bust

I expected this: Mario Draghi made his move today, even before the Eurosummit in Brussels announced its results, or lack thereof. He lowered the ECB's main interest rate and somewhat relaxed collateral requirements to allow distressed banks to borrow more easily, but he most emphatically did not do what Sarkozy undoubtedly hoped he would, namely, announce massive purchases of Italian government debt. In effect, he reiterated his stance that "solving the crisis is up to the politicians," who should not expect the central bank to bail them out. So the Sarkozy-Merkel plan is dead in the water even before it has hoisted its sails: there will be no strong wind from Frankfurt:

At a news conference, Mr. Draghi said he was “surprised” that comments he made last week were interpreted as a signal that the E.C.B. would buy more bonds if political leaders, who are meeting Thursday and Friday in Brussels, delivered tougher rules on budgetary discipline.

Klar, ja? What lies ahead? Most likely, slow or no growth, possibly bank failures, rising unemployment, and heightened political tensions everywhere. Plus growing nationalist animosities and rising power of extreme right-wing parties in several European countries.

Valls as Bridges

It's not every day that a defeated rival quickly moves to the center of the victor's presidential campaign, but that's what Manuel Valls has done in François Hollande's. Some say that he has put the official campaign manager, Pierre Moscovici, in the shade.

Now, Moscovici was a Strauss-Kahn backer, and Strauss-Kahn's publicist was an agency known as Euro RSCG, run by one Stéphane Fouks, who is a friend of Valls. So what we may be seeing here is a case of Valls becoming bridges (forgive the bad pun!). Euro RSCG had been preparing for years to run a presidential campaign. Then DSK got himself arrested, and all that work might have gone for naught had the boîte been unable to find a conduit to the candidate. Valls may have been the ideal bridge.

In any case, it's time for Fouks and company to start doing their magic, because the campaign has not been off to a fast start. And if yesterday's appearance by Hollande at the Alsthom factory was their work, they need to step up their game. The staging was almost the same as for Sarkozy's industrial visits, but Hollande doesn't have the jaw-jutting presence of the little guy going toe-to-toe with the tough worker. Shown in a white lab coat and hard hat yesterday on TV, he looked a bit like Mike Dukakis in his tank: not in his element. This is not the way to win back the working class.