Leaders: Germany must act to help save world economy
WATCHING the eurozone’s financial crisis is rather like helplessly watching a man clinging on to a cliff edge. His position was always perilous, but gradually the ledges and crevices crumble away and his fingerholds begin to loosen.
Meanwhile, at the foot of the cliff, a crowd of health and safety officials are standing round a fire engine arguing that the debris crashing down makes it too dangerous for the turntable ladder to reach him. They seem oblivious to the obvious risk that, eventually so much rubble may fall that they and the fire engine will be buried. Everyone knows what the outcome will be and everyone prays something will change to prevent it, but nobody is willing to make a decision.
German chancellor Angela Merkel is the key figure with the power to authorise the use of the ladder – the issuing of eurobonds backed by German taxpayers to re-finance struggling countries and their weakening banks. Other measures are needed – such as the European Central Bank flooding Europe with money – but the barrier preventing them being rolled out is German intransigence.
Ms Merkel is right to have some worries. Hard-earned German wealth could end up being squandered. Inflation, which is a particular historic nightmare, could be unleashed. But the more pressing nightmare is that the figure at the top of the cliff is no longer the small country of Greece but the entire world economy. Much of Europe, including Britain, is back in recession. Lack of consumer demand is slowing the Chinese economy. Investor uncertainty is halting American recovery. And German economic comfort depends on these markets continuing to buy its manufactured products, which will not be the case if the entire world economy starts going backwards.
Billionaire investor George Soros now reckons the euro will collapse within months. If so, Germany will suffer deeply. Its economy has prospered because it has been using an under- valued currency, enabling all those exports of which Germany is so proud. But if Germany has to revert to the Deutsche mark, or some shrunken Franco-German euro, that currency will shoot up in value, making German goods far too expensive for anyone else to buy.
Ms Merkel has to explain this to her countryfolk. She also has to explain that eurobonds are the necessary other side of the European fiscal integration that she has persuaded all bar Britain’s government to adopt. Monetary integration is not just about euro banknotes, it is also about euro instruments. Neither can David Cameron content himself with being part of the babbling crowd surrounding Ms Merkel. He has to be prepared to lend a hand extending the rescue ladder. This is no longer just about bailing out the undeserving profligate and an unwanted currency. It is about making sure Britain does not fall off the economic cliff along with everyone else.
Torch ignites public interest
Modern citizens, wrote the Roman satirist Juvenal, anxiously wish for only two things – bread and circuses. Bread may be a little bit hard to find just now, but a great circus – in the shape of the Olympics – is just around the corner.
This may be why Scots are turning out in their thousands to watch what, when it is stripped down to its essentials, is a curiously unthrilling event – a person, and not necessarily even a spectacularly fit person, trotting by carrying what might unkindly be described as a giant burning cigarette lighter.
The Olympics, when first awarded to London, were greeted a trifle sourly in Scotland as an excuse to divert lots of money to the south-east of England with precious little benefit, and possibly much disbenefit, to these northern parts.
Such churlishness seems to have completely disappeared. The citizens are out on the streets, cheering and waving as the spark which will eventually ignite the greatest show on earth passes by. At night-time stopping points, such as in Glasgow last night, thousands more will gather to party and dance.
Psychoanalysts may later wonder why this is so. Is this, following so rapidly on the Diamond Jubilee, a rush to celebrate what will be a great British event and thus a manifestation of resurgent Britishness? Or is it a harkening back to the old Scottish tradition of carrying a blazing cross from parish to parish to rouse the clans to fight for national freedom?
Or are such thoughts psycho-tripe and what is happening is merely a quite natural human wish to see something unlikely to happen again in our lifetimes to be able to tell grandchildren: I was there.
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Weather for Edinburgh
Saturday 18 May 2013
Temperature: 8 C to 12 C
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Temperature: 9 C to 17 C
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