http://online.wsj.com/article/BT-CO-20111208-716501.html
For those who have been following it, the sovereign debt crisis in Europe has been quite the comedy. Allow me to explain: nearly every important government decision by European officials in the last couple of months remind me of a quote from Animal House “I think that this situation absolutely requires a really futile and stupid gesture be done on somebody’s part!”
After the dean tells the Delta House fraternity that he’s expelling them all, “Otter” delivers that statement to inspire his brethren. “Blutto” (played by John Belushi) responds “…and we’re just the guys to do it.” They then devise a plan that brings mayhem to the entire town.
This is exactly what we keep getting from leaders in Europe. Futile and stupid gestures in response to events related to the debt crisis. The cycle is very simple. First, something really awful happens, like Greece defaulting, or a Bank needing a bailout. Then the markets panic. Standard and Poor’s will downgrade a country or two.
Then the politicians (who have somehow avoided getting thrown out of office) come out of the wood-work with their futile and stupid gestures. It doesn’t matter how it takes form. They start by making promises that they’re going to make everything all better. They’ll take talk about ‘debt plans’ and ‘bazookas’ and ‘firewalls’ and ‘debt brakes’ and all sorts of political mumbo-jumbo, ultimately buying themselves a little more time. Somehow, it works, and they buy themselves some time.
Soon some grand summit or meeting will be planned in the near future (this week it’s in Brussels.) They’ll assure us, ‘just wait till the summit, then the leaders will figure everything out’. Of course nothing ever gets solved.
One thing that has changed, though, is how much time they expect us to wait for the debt solution Christmas. It started as a week, maybe a month. Now, they expect us to wait several months until Angela Merkel and Nicholas Sarcozy (Bluto and Otter in my analogy) can come up with the comprehensive plan that will rescue us.
This is of course very convenient for leaders like Sarcozy have elections coming up in the next couple of months. So whatever is decided in this next plan, we’re gonna have to wait until at least the summer. If it doesn’t work (and it never does), the cycle repeats and they dream up another plan.
The only problem is, markets aren’t going to wait. The futile and stupid gestures will end. Governments in Europe are either going to default on their debt, or they’re not. If they do, the longer the politicians bullshit us, the more painful it’s going to be for everyone.
That’s an interesting take on how modern politics work. There's no doubt that markets are driven by theatrics. In fact Europe is not so different from the United States. It can be interesting, especially when considering economic subjects, to compare and contrast the European Union with the United States. While the comparison is somewhat of a stretch in political relationships because the US is much more intertwined politically, when it comes to the economy they often mirror each other perfectly. With the US economy we saw one political side harping on debt and halting political discourse in a way that slowed the economy, while the other side made bailouts that arguably had very small impact on the economy. All the while, the two side's are promoting this political conflict because conflict promotes poll numbers. I think your right in suggesting that political action involving global economics must be must be handled with more efficient unified discourse in the modern era of globalized politics.
ReplyDeleteI really like the Animal House reference. I think sometimes reality imitates art and that's an interesting point. It's comedic, but really tragic for the people in Europe. Angela Merkel and Nicholas Sarkozy are interesting characters in Europe's sad economic comedy because it is a strong possibility that they actually can come up with a comprehensive plan that will pull Europe out of this crisis. The comparison of the US and Europe makes sense, but on a large scale, they are different because of the different economic structures/amount of money that they are in debt for. It may be funny for us to laugh at Europe's failed economy, but what if Europeans are laughing at us?
ReplyDeleteIt is funny how the cycle works but in the big picture, it is so sad to see because this is the time that people need to be coming up with solutions. There is no need to wait until you are at the big meeting to come up with some sort of plan. Perhaps people may not be able to write out all the details of any plan because there are others involved who also want a say in how to fix a problem and improve the country, but a person can start thinking about what a plan needs to have in order for that plan to succeed. Empty gestures will not help the European countries get out of the debt. Instead, it only makes the hole that they will need to get out of that much deeper.
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