Another day, another backtrack from the Fuhrerin. Yesterday, she budged, last night, she unbudged. She pushed her deputy finance minister, Steffen Kampeter, out of the door to rule out “eurobond-lite” plans to pool part of eurozone countries’ debt before the Land of Milk & Honey (Fiskalpakt) is established. Kampeter didn’t even bother to can the idea of bonds issued by the United European Bankrupts’ Association, so we’re left wondering what van Rompuy and Barroso will be working on today.
It’s a familiar pattern this Merkel bum-shuffle. Every morning, the hacks go on a sort of Grand Tour of Brussels, Paris, Frankfurt and then Berlin. Brussels says she ought to, Paris says we don’t know, ECB Frankfurt says she must, Bankfurt says she mustn’t, and then Merkel waits until late afternoon before saying I’m not. Easy money if you’re a journalist in search of lunch somewhere nice, insane monetarism for the eurozone. Everyone’s waiting for the moment when at least one Germany says “Genug” and prints the Nordeuro or something. Could be the 28th of June when France tables its plan to loot the EFSF, could be the moment when Spain needs a full bailout. My money’s on the latter – and yesterday we came perilously close, as bond prices there spiked to levels normally associated with towel-throwing. There’s a gag in there somewhere about Germans, but I can’t be bothered.
Bored with Spain, Moody’s downgraded four Dutch banks at the end of play last night….but thankfully not the European Central Bank, because that one now Stands Ready. All of the Central Banks are now standing to attention, because they are poised To Act. Hurrah. Is it Macbeth, Death of a Salesman, or Le Bourgeois Gentilhomme? None of these, in fact: Combating the Greek Storm is a new play in 729 parts by the obscure patagonian Irish author Brendan O’llocks, and Reuters previewed it late last night GMT.
The plot is good, the content thin, the script risible. What happens is a senior U.S. official proclaims that, if severe market strains emerge after an unusual confluence of three elections this weekend – there are important elections in Egypt, France and Greece – central bankers are on standby to ensure enough cash is flowing through the financial system. “The central banks are preparing for coordinated action to provide liquidity,” confirms a senior G20 aide familiar with discussions among international financial diplomats. His statement is then confirmed by several other G20 officials. And G20 organisers confirm that it’s going to provide a dramatic backdrop to the G20 summit of world leaders, who will gather in Los Cabos, Mexico, on Monday and Tuesday. Penultimately, the head chef at Los Troughos confirms that he has a firm booking for a working dinner on Monday, and the Maitre d’ of Rosita y Gonzales says he has the same for Tuesday lunch. The denouement is that nothing happens.
I haven’t taken in the show yet, but I hear the rehearsals aren’t going well. However, last night’s previews went down well off Wall Street, and as a result shares rose overnight in Asia. One suspects that this was part of the plot. You have to see it as a kind of audience participation shtick.
President Obama told his supporters at a rally last night that the economy now depends on the result of the US Presidential Election. He misspoke of course, in that what he really means is the result of the election depends on the economy – as it nearly always does. This is a smart move by the Black Dude: he switches attention away from the fact that the US recovery is a leveson of lies (see – it’s catching on already) in favour of pointing out something correct – that Mitt Romney has a speech impediment: he is incapable of saying anything of any interest beyond stuff that fires a barrage of lead into his feet. At the same time, the Prezz appeals to calm, patriotic heads: Vote for the President, now is not the time for experiments, they send bad signals. That last White House occupant to pull this stunt was Dick Nixon. He got re-elected by a landslide, even though his hobby was burgling folks. The Obama tactic may be derivative (like everything else he does and says) but it can’t miss.
George Osborne, meanwhile, is about to throw away another £140bn, or over ten times what he has ‘saved’ so far with Austerity 1. I suspect this is really a disguised QE3, and I do so because the scheme will involve giving yet more dosh to banks. The headlines here in the UK this morning say that it’s to stimulate the economy and help us fend off the euro-collapse. I understand some wags in the Treasury are referring to it as Project Alamo, and given that the sum about to hit us is at least €50 trillion, it’s an apt parallel.
Number 11′s spin-line on the ‘boost’ is that it will be used to help people get onto the property ladder and start new businesses. The property ladder is irrelevant at the moment, and the money for new small businesses (a) should’ve been handed out in June 2010 and (b) should’ve been done by the banks anyway. But the Draper-turned-Lady-Bountiful extracts every last drop of Anti-Nasty pleading into his announcement:
“We are not powerless in the face of the euro-zone debt storm,” Mr Osborne lied. “We can deploy new firepower to defend our economy from the crisis on our doorstep. Funding for lending to the family aspiring to own their home and the business that wants to expand…the Government – with the help of the Bank of England – will not stand on the sidelines and do nothing as the storm gathers.”
Absolute bollocks and a complete waste of money. Who in their right minds would start a new business now, unless it involved storing bankrupt office equipment? The economy is flatlining, and demand is at a lower point than it’s been for decades. What we are witnessing here is a switch from Austerity 1 to QE3, disguised as Osborne Bazooka 1 and, in effect, Plan B. It’s that simple and well thought-through.
Heigh-ho. Let’s face the day. And hey…let’s be careful out there.