Here in Germany, there is surprisingly little discussion or alarm about the EU. Apparently, most feel it is the ‘other’ countries — Greece, Portugal, Italy — that have problems; Germany just has to decide how the problems should be fixed, and that is a technical problem and not the concern of most Germans. Maybe people are just distracted by the wonderfully warm, exceptionally nice November weather. Maybe people just feel glad that they are not facing anything like the austerity measures being pressed on Greece, or Italy, or even France.
Today, stock markets popped upwards on word that Italian PM Berlosconi will resign, hard on the heels of Greek PM Papandreou’s announced resignation. Gee whiz! Just get rid of problematic leaders and problems will go away? Maybe President Obama should resign too and that will cure 9% unemployment? And can we also get a pony for everyone?
One that is clear is that German PM Angela Merkul will emerge stronger than ever. Within Germany she has no rivals — the only question in German politics is which party will be her coalition partner in the next government.
With Berlusconi now out, the British leadership hampered by the co-habitation of Tories and Liberal Dems, and Sarkozy likely to struggle to fend off a challenge for the French Presidency, Merkel is standing out as Europe’s most established, experienced, and powerful leader. Maybe the markets like that.
Still, it is amazing the way fundamental problems are swept under the rug in the hope that changes in personnel or relatively modest course corrections will cure them.
Austerity measures cannot generate significant returns if undertaken in the absence of economic growth. Yet every country in Europe is implementing austerity measures, seemingly hoping that growth ‘elsewhere’ will allow them to reap some gains from those measures. In fact, they only make the growth problem more severe.
So here we go again — a few days of joyous reprieve, likely to be followed by further problems for Italy and Greece, and then the same grief for the Euro.