Obama apparently realizes that Angela Merkel's suicidal austerity policies are wrecking Europe's economy.
Whether he thinks they are undesirable because of that is hard to say, given his strong commitment to neoliberal economic policies. But endangering his re-election by endangering US recovery? That apparently can get his attention. McClatchy's reporting that I've seen lately on the European crisis has been not very good. But Lesley Clark reports for them on the Obama team's expressed concerns in G-8 meeting at presidential retreat at Camp David, Md. 05/16/2012:
The White House is billing the get-together at the secluded retreat in the Catoctin Mountains as a "back to basics" gathering, saying the "intimacy" of the retreat will allow for candid talk. Analysts say the administration is hoping to hear embattled European leaders voice support for growth measures, as well as the tough austerity measures that have yet to stem the crisis.And the truth is so far, tsunamis have been only modestly effective in devastating coastal areas of Japan.
"European leaders have signaled they intend to do whatever it takes to reinforce the foundations of their monetary union," said Michael Froman, Obama's deputy national security adviser for international economic affairs. But, he added, that "serious risks remain and the markets are skeptical that the measures taken so far are sufficient to secure the recovery and remove the risk of the crisis deepening further."
The White House has put the onus on Europe to take action and has offered advice, but analysts say the stakes for a recovery are critical for the White House.
"In the next six months, his fate for a second term will be decided and there’s a good chance Europe could highjack the electoral campaign," said Domenico Lombardi, president of the Oxford Institute for Economic Policy in England and a senior fellow at the Brookings Institution, a Washington-based think tank. "The truth is so far, the Europeans have been only modestly effective in tackling the crisis." [my emphasis]
Actually, Angie's austerity policies for countries like Greece, Ireland, Italy, Portugal and Spain have been very effective - at doing what austerity policies do during a depression, which is to make economic conditions much worse.
Clark doesn't specify which "analysts" are saying the following. But it does sound very Obama-like:
Analysts expect Obama to continue a path of quiet diplomacy, prodding European leaders to find a way out of the economic turmoil that could rattle U.S. markets. He's expected to continue to press for growth measures, along with the austerity measures championed by German chancellor Angela Merkel. [my emphasis]The doctor believes antibiotics should be administered while continuing to bleed the patient. Awesome!
As Gene Lyons recently wrote, "Alas, it's characteristic of President Obama to split every difference — expressing high ideals so cautiously as to arouse fierce opposition while leaving his allies holding the bag." (Overreacting To Obama’s Gay Marriage Decision The National Memo 05/16/2012). It sounds like that is his approach on the European crisis, as well.
Clark later reported that Obama himself used a very similar formulation (New French leader Francois Hollande wins Obama’s backing for EU economic growth McClatchy Newspapers 05/18/2012):
But the debt crisis was sure to dominate the G-8 meeting of leading industrial nations Friday night and Saturday at Camp David, and Obama said the two were looking forward to talking with the other leaders "about how we can manage a responsible approach to fiscal consolidation that is coupled with a strong growth agenda."But according to this Spiegel Online report (G-8-Gipfel. Merkel setzt Sparkurs durch 19.05.2012), Angie told Obama and the rest of them: Ve vill continue to destroy ze vassal nations as ve please!!
Angie is a nasty piece of work.
After telling Obama and Hollande to go diddle themselves, Angie spelled out what she means when she babbles about growth measures: more austerity; structural reform; and, investments in the future. "Structural reform" means more reduction of wages, jobs, income, retirement security and union rights. Investments for the future probably means new tax cuts for corporations or more deregulation or the like. No change from her suicide course for Europe, in other words.
Britain is outside the eurozone, so they aren't in a position to be directly bludgeoned by Angie into suicidal austerity policies. David Cameron's Conservative-Liberal Democrat government is embracing them all on their own, as Martin Wolf reports in Cameron is consigning the UK to stagnation Financial Times 05/17/2012:
The world, eurozone and UK economies are in a far worse state than expected. Yet Mr Cameron insists that “we are moving in the right direction”. Who is this "we"? UK gross domestic product is stuck at 4 per cent below its pre-crisis peak in what is the longest such slump since the 19th century, with no end in sight. Even if one believes that part of the pre-crisis output was an illusion, why should one accept that the UK economy has lost the capacity to grow altogether? How can Mr Cameron believe the economy is moving in the right direction when it is not moving?Wolf harshes on the Prime Minister pretty heavily over this approach:
The reason Mr Cameron believes this is because he is fixated not with the dire economic performance, but with the public sector’s balance sheet – and not even the whole balance sheet, but with its liabilities. "We cannot blow the budget on more spending and more debt," he says.
With real interest rates close to zero – yes, zero – it is impossible to believe that the government cannot find investments to make itself, or investments it can make with the private sector, or private investments whose tail risks it can insure that do not earn more than the real cost of funds. If that were not true, the UK would be finished. Not only the economy, but the government itself is virtually certain to be better off if it undertook such investments and if it were to do its accounting in a rational way. No sane institution analyses its decisions on the basis of cash flows, annual borrowings and its debt stock. Yet government is the longest-lived agent in the economy. This does not even deserve the label primitive. It is simply ridiculous. ...Cameron's austerity program is arguably even less sensible than Angie's. Angie is focusing on driving down wages and salaries and standards of living in other eurozone countries; her overall approach in the short-term strengthens Germany's advantage in the eurozone at the expense of basically as the other member countries. She hasn't been pursuing the same kind of austerity policies in Germany itself. Cameron is directly wrecking his own country's economy, apparently out of some kind of similar truth faith in austerity economics.
The result is likely to be a permanent reduction in the output of the UK, not to mention permanent damage to a whole generation of the unemployed. I have words for such behaviour. Not on this list is the word 'sensible'.
Next up in the battle to save Europe from Angienomics: an "informal" EU summit in Brussels on Wednesday.
Tags: angela merkel, austerity economics, barack obama