‘I’d say the question is one of needing a voice of calm to change panic into concerted action. But it’s not going to happen.
1. The original architects of the EU built a tower of Babel on the premise that it wouldn’t matter if people didn’t understand each other’s culture, economy, attitudes to credit, work ethic and politics – it would all be alright in the end. It clearly isn’t.
2. The EU has a systemic financial arrangement about as confusing, exceptional, loose and contradictory as it’s possible to imagine…with the added ingredient of politicians interfering with it. It’s a mess, and would take years (not months) to sort out – IF the political will was there to do it, and the hard-up citizenry were prepared to buy into it. I think this very doubtful.
3. Ultimately, given an appalling outlook for taxes, benefits, consumption levels (and private sector growth outside Germany and the Low Countries) what tribes always do is revert to their tribe. When Gordon Brown tried in 2009 to make all the G20 promise not to build siege economies, he was being both optimistic in his endeavour, and naive in his interpretation of the response. The G20 pulled this off when it was just the banks…but at a cost which is today building Crash II. When it’s the G20 themselves, they will bow to the riotous wishes of their individual electorates.
Something will have to give: the membership level of the Eurozone, lax deficit government, German intransigence, Christine LaGrande’s la-la overconfidence, Brussels hubris, personal liberties, capitalist aims, the EU itself – or a combination of these things. But I can tell you as a retired but still in touch market realist, the face being presented to the markets and dealers now is Jekyll one minute and Hyde the next. And the markets don’t like schizophrenics: they prefer soundly financed economics.’