There is good news today on several fronts. The Arab League, meeting in Cairo, has stated its intention to stop aid to extremists and cooperate in efforts to fight the Islamic State (ISIS).
Also this week, the European Central Bank borrowed a page from the Fed’s playbook, starting the mass buying of securities to fight deflation in the Eurozone.
Obama is set to announce a comprehensive strategy on ISIS — much better than “no strategy,” we hope.
And in the Ukraine, Russia’s President Putin and Ukraine’s President Poroshenko announced a cease-fire and potential peace agreement.
But at the end of the day, these kinds of good news are of the type “The roof is leaking, but the repairman says he is on the way…” We don’t really know what the repairman will show up with, or if his efforts will do the job, or at what price.
In the Middle east, we are far from knowing whether Arab states will actively join the West in a coalition against ISIS, or what they will contribute. Especially critical is their following through on efforts to stop their private citizens from funding ISIS and other extremists; without starving the radicals of funds they will continue to fight on.
It also is not clear how deep the rot is in the Eurozone. It was depressing that BOTH Italy and Germany had negative economic growth in the most recent quarter, and that France remains flat. With the largest economies slowing or in reverse, how can the smaller ones hope to recover? Draghi’s new playbook is an admission that the old one failed to do the job of reviving Europe’s economy. A sick Europe doesn’t look particularly frightening to Putin or ISIS.
And for both ISIS and the Ukraine, we are a long way from saying the threat of violence and instability is over. The war against ISIS is just beginning; and the evolution of Ukraine as a newly democratic state has just started.
So let’s hope the repairs on the world’s problems go well; right now we are waiting to see any hopeful results — and worried about the bill!