Thursday, May 17, 2012

Angie's current tough times

Angie has had a tough couple of weeks. All this democracy stuff has been causing no end of headaches for her drive to convert Europe into a poverty-stricken set of countries that make Germany rich.

The New York Times quotes her saying that maybe she kinda-sorta might like to do something somewhere in some kind that might help Greece's economy grow (Nicolas Kulish and Melissa Eddy, Softening, Merkel Says She Is Open to Stimulus for Greece 05/16/2012):

"I have the will, the determination to keep Greece in the euro zone," she said in an interview on CNBC on Wednesday, in what appeared to be an attempt to relax an increasingly tense situation.

If Greek officials are looking for "stimulus to be pursued for growth in the euro zone, which we could pursue in the interest of Greece, we’re open for this," Ms. Merkel said. "Germany is open for this."

Europe was shaken anew this week by the chaos in Greece, where a bank run threatened to hasten the country’s exit from the euro and jeopardize the Continent’s financial stability. While the impact of a country’s leaving the euro is hard to predict, economists fear the crisis could spread to much larger countries like Spain and Italy if financial markets bid up borrowing rates to unsustainable levels.
Angie is coming to Chicago for the NATO and EU summits that begin Friday. To welcome her, the Atlantic Alliance has published a new paper, Anchoring the Alliance May 2012 with this evaluation of Germany's role:

Germany needs to rededicate its attention to NATO. NATO needs a much stronger, more strategically
ambitious, and more capable Germany to remain a healthy alliance. Germany today is an economic powerhouse, but a second-rate military power. It has shown determination during the Euro debt crisis, but its lack of political will weakens its military contributions in NATO. The European and American leaders we consulted for this report are in near unanimous agreement that Germany must lead with more confidence and strength. German military weakness is NATO's most significant problem. A stronger Germany would be the greatest boost to NATO’s future.
Of course, the United States would like for Germany to spend more money and contribute more troops to support military missions from Afghanistan to Africa and who knows where else.

Yes, Germany under Angie "has shown determination during the Euro debt crisis": the determination to pursue a destructive austerity policy for other EU countries that has devastated the country of Greece and is doing the same to Ireland, Italy, Portugal and Spain, with more candidates for that treatment to come if they permit it. How anyone but delusional conservatives can imagine that a good thing or a sign of responsibility is beyond me.

The report also states:

For NATO to succeed in the future, the Alliance needs a stronger Germany. One senior Alliance official labeled Germany a "ost nation" in its political and military leadership. Europe’s future relevance as a global strategic partner of the United States is contingent on Germany taking its full place as a much stronger political and military leader within Europe and the transatlantic Alliance.
After the Iraq War fiasco, I'm amazed that NATO now appears that it may survive the European Union. But if Angie has wrecked the EU, Germany and France and Britain are only going to be pipsqeak powers in the world compared to what a united and effective EU was and could have been. Will German and French voters want to join the Brits as faithful, obedient poodles for American policy no matter who is President or what policies they are following? I have my doubts.

After failing to do anything remotely adequate to help the eurozone deal with the crisis, their EU partner Britain under David Cameron's government is recognizing that optimism over the consequences of a Greek exit from the eurozone might not be that bright (Cost of Greek exit from euro put at $1tn Guardian 05/14/2012):

The British government is making urgent preparations to cope with the fallout of a possible Greek exit from the single currency, after the governor of the Bank of England, Sir Mervyn King, warned that Europe was "tearing itself apart".

Reports from Athens that massive sums of money were being spirited out of the country intensified concern in London about the impact of a splintering of the eurozone on a UK economy that is stuck in double-dip recession. One estimate put the cost to the eurozone of Greece making a disorderly exit from the currency at $1tn, 5% of output. ...

Sony Kapoor, of the Brussels-based Re-Define thinktank, said: "The high-stakes game of chicken between Greek and other EU politicians must end now. Those saying that a Greek exit from the eurozone will not be a big deal either don't know what they are talking about, or have some ulterior motives. The social, political and economic damage to the EU from a Greek exit is potentially incalculable."
Angie, you're doing a heckuva job!

F. Eder, et al, report in Griechisches Bankensystem steuert auf Kollaps zu Welt Online 17.05.2012 on the ECB's debates about how much help to provide to keep Greek banks afloat as capital flees the country. EU law, as I understand it, doesn't allow individual countries to block capital transfers out of their country to another EU country. They report that since the election on May 6, an average of €700 million per day. Bank runs, in other words.

And the panic is already having repercussions in driving up the public borrowing costs in Spain and Italy to 6%-plus interest rates that would be unsustainable if they persist. (by David Keohane, Tis an ugly morning in euroland FT Alphaville 05/16/2012; Ute Müller,
Spanien zittert vor dem Gespenst der Insolvenz Welt Online 17.05.2012; España paga hasta un 50% más de intereses por su deuda Público 17.05.2012; Elena Herrera, Rajoy pide a la UE que defienda la sostenibilidad de la deuda de los países europeos Público 16.05.2012)

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