Innovation/Global Risk 

The Euro (Non)-Leadership Sinks Again: For the 8th Time

By Shlomo Maital




  It is said that drowning victims who sink below the surface for the third time rarely come up again.  Not so.  Europe’s leaders have met eight times (!), at summits of futility, to deal with the Euro problem.  Each time, they waffle, adopt half-measures, and when capital markets vote “unlike”, they meet again.  Sisyphus’ boulder was child’s play compared with what Europe’s leaders seem to be doing.  They met again, for the 8th time, sank…and don’t bet against a 9th summit. 

   At the latest European “summit” the EU agreed on FUTURE sanctions against members that overspend.  Great! But wait. What about past debt?  Well, let’s dribble an extra 200 m. euros – a tenth of the amount needed to calm capital markets.  The “Merkozy” alliance (Merkel + Sarkozy) is actually just Merkel, because Sarkozy buckled long ago in the face of German demands.  Merkozy seems to be trying to forestall future problems, rather than deal with present, intractable ones.  This is like calling a supplier to order a fire extinguisher for delivery next year, when your kitchen is burning.

  Europe, led by Germany, is behaving irresponsibly.  And it is backfiring, because Germany’s economy too is slowing. It HAS to, when Europe and the world economies slow.  As the world’s largest economy, the EU is sinking the global economic ship.  The internal European bickering is disastrous, as France’s Central Bank head blasts rating agencies for threatening to downgrade France’s debt. Downgrade Britain, he says.  They’re worse than us.   European incompetence and lack of leadership are exacting a heavy toll on the world. 

    I urge readers to write off Europe and make a personal contingency plan, in the event Greece pulls out of the 17-nation euro bloc.  Merkel’s political coalition is falling apart, so her stubborn refusal to commit funds to rescue Greece and the euro isn’t paying off anyway.  Perhaps the “optimal currency union” that Nobel Laureate Robert Mundell advocated was never that ‘optimal’.