Guardian
October 18, 2011
Europe's financial crisis is acquiring the stench of Munich. No, it is not Nazi Germany. But it is the same ceaseless meetings and pretend deals, the same flying here and there and getting nowhere, the same refusing to acknowledge catastrophe on the horizon, hoping someone else will take a tough decision.
In 2008 the financial spotlight was on Washington. Banks were rescued, but not the American economy. Now the spotlight is on Europe. Again the talk is of saving banks, and none of saving economies. Britain's banks have been given another £75bn, which makes £275bn over two years. No one seems to have a clue where this stupefying sum has gone. Most has allegedly vanished overseas, covering bad debts, fuelling commodity prices, depressing the pound and increasing inflation. Meanwhile, Britain's economy has ground from slow to stop. Quantitative easing is like filling a car with petrol when the tank is disconnected from the engine. It is a dreadful policy.
At the weekend's G20 financial summit, the Americans implored Europe to rescue its stumbling finances by next week at the latest. This meant restructuring Greece's desperate debt mountain, somehow propping up other eurozone debts, and a crash programme to boost spending through our old friends – ponderous "big investment projects", which somehow always take precedence over demand. Angela Merkel dismissed all this pleading out of hand. "Dreams building up of a package when everything will be solved by Monday" were impossible, the German leader said. Stock markets duly plunged further.
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