Friday, June 22, 2012

Pseudo-stimulus for the EU?

The meeting on Thursday among the four largest EU countries economically - Italy, France, Germany and Spain - came up with a puzzling agreement that said they were going to spend a little more on projects to stimulate the European economy. Yves Smith characterizes it as "a meaningless announcement compounded by continued focus on ongoing German court challenges to more aggressive support of rescues. Even if these cases lose, any uncertainty and delay has the potential to accelerate the ongoing bank run out of periphery countries." ("The Eurozone's Strategy is a Disaster" Naked Capitalism 06/21/2012)

As Patrick Donahue and Chiara Vasarri report (Merkel Parries Push For Euro Debt Plan As Growth Outline Agreed Bloomberg News 06/22/2012)

German Chancellor Angela Merkel parried attempts to get her to accept more flexibility for the euro-region’s rescue funds, while agreeing with leaders of Italy, Spain and France on an outline to spur economic growth.

At a four-way summit meeting in Rome yesterday, Merkel, Italian Prime Minister Mario Monti, French President Francois Hollande and Spanish Prime Minister Mariano Rajoy said they would lobby their European Union partners to accept a growth plan of as much as 130 billion euros ($163 billion), or about 1 percent of the euro-region’s economic output.
But there don't seem to be any definite plans about just where the €130B would come from, or how immediate it might be. Some of the €130B may even include estimated private investment components of new public-private partnerships. In any case, it looks fairly cosmetic in relation to the problems faced by the European economy.

Merkel got unfriendly treatment from the British magazine New Statesman (Mehdi Hasan, Angela Merkel’s mania for austerity is destroying Europe 06/20/2012) in an article accompanied by this graphic of Angie as the Angienator:

Meanwhile, in Greece: Tom Stoukas and Natalie Week, Greek Premier To Get Surgery, Finance Minister Hospitalized Bloomberg News 06/22/2012.

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