The events in the eurozone remain to be an engaging soap giving us cliffhanger after cliffhanger. Bailout packages have been agreed upon and bond auctions in ailing economies have gone better than expected. Then the fall of the Dutch cabinet gave the markets something to fret about. Yet, the caretaker government and a majority of opposition parties agreed on the Budget and proposed austerity measures to save yet another trading day. Then May 6 came and France elected a president critical of current austerity measures and Greece went to the polls to express their objection against ongoing cuts. And the markets are having a proper fright. The results of last week’s local elections this side of the North Sea also expressed a dissatisfaction with the ruling parties’ economic policies as both political entities making up the coalition government lost a considerable amount of councils across the country.
Strict sovereign bookkeeping does not seem to go without human cost. Most actors in the soap called the Eurozone Mess agree that austerity is necessary and not entirely free of pain. However, the different parties seem to disagree on how much it’s going to hurt and who exactly is to carry (the majority) of the burden.
Germany’s Chancellor Merkel is greatly in favour of fiscal discipline across the eurozone. Who can blame her. As head of a thrifty nation with a healthy economy she is willing to pay for the budgetary misfortunes/ stupidity of other countries as long as the European dream is kept alive. She had a solid partner in outgoing president Sarkozy. Yet, the incoming French president has some different ideas.
Great efforts are continued to be made across the eurozone to save the currency and participating economies. Ordinary people who might have lost their jobs, their spending power, who are expected to work longer for a smaller pension might be asking: is saving the euro really worth all that discomfort and pain? What is the European Union worth if, besides the economic distress, the increasing political integration leaves the citizens of the Union with less democratic power? What is the pain of austerity worth as it has become evident that ‘we’ are not all in this together? What is austerity worth if the financial sector, that dragged us down in the first place remains a considerable part of the (UK) economy and is still ‘too big too fail’? What is the gloom and doom worth if after three years of austerity there is still no economic growth and we’re stuck with a chancellor who refuses to change course?
As investors want stability the latest anti-austerity votes are creating volatility as the future has become less certain yet again. If it’s not possible to enforce strict budgeting to please both the markets and the people then something’s got to give. But whatever it is that’s giving in, the consequences don’t seem particularly pretty. An Avengers’ Assemble to come to the economic and fiscal rescue would be nice. And if that’s not an option, some morphine will do.
top image: business week
image right: telegraph.co.uk