Friday, 22 June 2012
Death by a thousand cuts
Moody's recently cut Britain's credit ratings, and that of 16 large banks. Today Mario Monti, Merkel and other Eurozone leaders have met in Rome to discuss a way out of the crisis. Greece has been given more finanicial support than any European nation in history. More to the point, it owes more than Germany did in it's Weimar Days. It is clear that Britain is heading into a recession. It is being slightly alleviated by the Pound Sterling, but that won't be enough for when the second knock comes. Italy is now in strife, and may soon slip into the same mire that Spain finds itself in. The EU is dying by death by a thousand cuts. The big picture is that now the ''big four'' are meeting in Rome. Times are getting worse, there will be a knockout blow, sadly the consequences will be very long lasting. If the situation in Italy worsens, combined with Spain, this may be the straw that breaks the camels back.
Its not unthinkable that should the new ''conservative'' coalition in Greece become more self assured, the sitution might improve. Fact is Greece's debt will take decades to pay off. In all but name Germany owns it. Merkel will no doubt show her authority at this Rome conference, and reminiscent of the Czech campaign of 1938. Merkel will keep testing everyone elses patience, whilst flexing her strength...
This ''slow burn austerity'' policy is harmful and if anything too slow. What needs to be doen is some form of swift action. This crisis is a wound that must be sterilised, lest it spread to other markets. The US economy is backed up, the Chinese is slowed and Australia's is very uncertain. Germany is in a stable state. Unlike the rest of Europe, Merkel knows this and like the other Eurozone leaders doesn't give a damn about other ''Euro-unity'', she just wants the best for Germany. Unlike say Britain or Hungary, whats best for Germany isn't best for Europe.