Is Europe a Little Too Quiet These Days?
by John BlankOctober 26, 2012 | Comments : 5 Recommended this article: (0)
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As the weekend approaches, I wanted to feature the ideas and opinions of a noted European columnist.
Ambrose Evans-Pritchard is International Business Editor ofThe Daily Telegraph. He has covered world politics and economics for 30 years.
I think he can update us on the European situation. Better for someone in Europe to comment, than for me to comment from afar.
This area of the world has been a little too quiet since Draghi made his core decisions to lower interest rates on Spanish and Italian debt in September.
Here are five of Ambrose’s most provocative October statements, each pulled from a different column.
(1) “Talks in Brussels are going on in a parallel universe. Unless EU leaders can agree to action that is crystal clear, free of conditions, and takes all risk of Spanish default off the table forever, they will have trouble restoring confidence. The stabilization edifice is still on shaky ground.”
(2) “Germany is in deeper than it likes to tell its own people. It is precisely for this reason that Swiss rating agency I-CV stripped Germany of its AAA rating last month. “Germany has taken on contingent liabilities of €2 trillion. When you create these backstops, the money comes from somewhere and it can all go wrong,” said I-CV’s Rene Hermann.”
(3) “An alliance of private organizations in France has issued a protest entitled “State of Emergency for Business”, warning that confiscatory tax rates threaten lasting damage to the French economy.”
(4) “Fear of escalating demands byGermany, Finland and Hollandis a key reason why Spanish premier Mariano Rajoy continues to drag his feet on a full sovereign bailout. Spain's refusal to act has frozen the eurozone rescue machinery and begun to rattle markets. The European Central Bank will not buy Spanish bonds until the country requests aid from the European Stability Mechanism (ESM) and signs a "Memorandum" giving up fiscal sovereignty.”
(5) “Drastic fiscal tightening in a string of interlinked countries does two to three times more damage than assumed, especially if there is no offsetting monetary stimulus. Pushed beyond the therapeutic dose, it is self-defeating. At a certain point it becomes pain for pain's sake. The error has long been obvious in Greece.“
The weekend questions I have…
After reading these five paragraphs, do you think the current quiet in Europe is merely a gloss over a brewing series of serious problems?
Or have problems gotten better, and Europe is going to get better?
Here is a link to the full Ambrose Evans-Prichard stories on Europe.
Have a great weekend!
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