The austerity Merkel will now enforce on the laggards just drives down the whole eurozone
Merkel is looking like a shoo-in for the German chancellorship in next month’s elections: there’s no alternative leader out there. And there’s only one nagging issue: Greece is out of the folding-stuff again and needs another €11 billion, and no doubt more in a few months’ time; and Cyprus; and Portugal; and Spain, and whoever's about to max out on their plastic economies.
The bailed-out economies love it! The only people not loving it are the Germans, particularly the younger ones, who realise there’s a world out there beyond the debt-ridden, sclerotic euro-economy.
The trouble for our Angela is that despite the increased austerity piled onto the Club O’Med, the private punters have a simple system to cope and wait for the next bail-out: they don’t pay their taxes.
The austerity Merkel will now enforce on the laggards just drives down the whole eurozone, as she is determined to impose German-style financial discipline on nations who don’t and wouldn’t know the meaning of the word, even if it knocked them over in the street.
So, as the UK and US, who believe in the markets and let them operate and who devalue as they acknowledge their bad debts (slowly), declare there are now visible green shoots in their economies, up jump the euro-worshippers to proclaim that the eurozone is recovering too. You too may believe that Lazarus rose from the dead.
The reality in the eurozone is as follows, based on the second quarter’s figures: Germany was up 0.7%, France with unemployment at 11% was up 0.5%, even Portugal was up 0.1%… but the Netherlands were down 0.2%, with a belated but real slump in house prices.
The real point is that Q1 across the continent was hit by appalling weather – remember the massive floods across Germany? So the 0.1% rise in Portugal is the equivalent to every Portuguese getting out of bed three seconds earlier, or something equally daft. Luckily for Angela, the next Portuguese debt repayment falls due on September 23, the day after the election. Then we’ll know when the next stage in the ongoing Euro-crisis is upon us.
The one nagging issue for Merkel in these election is if events in the next month conspire to give the Eurosceptics among the German electorate a shot-in-the-arm… because after them, from here on in, one way or another, Germany is going to be left paying the bill, and it ain’t gonna be small.