Guest post. Translated from the French by Tim Gupwell
Financiers loathe risk, though they don’t mind so much if it is others bearing it. When they refer to it they juxtapose terms of risk aversion or, its opposite, appetite for risk, but this is only another of their manners of speaking (of which they have so many). In reality they cannot stand others making them take risks and when this is required, they make their feelings known about it in the strongest possible terms.
For having played with fire to an excessive degree, the Spanish government is paying the price on the markets, as indeed are the European authorities, due to repeated prevarications. One has lost count of the number of videoconferences on the subject of the Greek elections, but nothing has come along to relieve the incertitude hovering on the horizon. Italy is also caught in the storm, Mario Monti obliged to deny the necessity for a rescue plan for his country, feeling the need to add an “even in the future” in his desire to be convincing. Three crises are in the process of coming together at the same time and the authorities are still discussing whether the EFSF or the ESM is going to be used to bail out the banks…
Confronted with the urgency of the situation, the ECB is breaking its ties with the German government and calling for the creation without preconditions of a banking union (but for later), ready to take responsibility for European banking supervision, whereas Wolfgang Schäuble has once more reaffirmed the German refusal to pool all the debts, in any way, shape or form, which is not accompanied by a relinquishment of sovereignty.
The debate is shifting onto shaky ground. The Minister has just declared, in order to justify this refusal to give into pressure, that “it is not up to the markets to dictate events; for this would lead to a loss of democratic legitimacy”. Wise remarks, but what has he proposed for democracy, if it is not an ECB control of the banks and vaguely constructed bodies to watch over European budgets, responsible for applying ratios and rules which have no economic basis nor political justification?
Angela Merkel has demanded more time for the structural reforms undertaken to take effect, “at a time when several countries have started to head in the right direction”, but the Italian economic journal Il Sole 24 Ore, close to the Confindustria (the employers’ organization), and Christine Lagarde, are talking of a three month timescale, if they are generous.
François Hollande has called for imagination to find a growth which “will not come from wishful thinking, nor even from press releases at the end of European or global conventions”. No more, he added, than it will come from “additional public spending”. He concluded by stating “it can come from a common European desire to put new instruments in place: Eurobonds, financial instruments…..” Nothing further to add.