The markets and the Union

As fear takes over the stock markets completely, we cannot but wonder why we are so utterly unable to deal with the financial spirits we called years ago and loved so dearly for so long. The biggest problem though is that we don’t just lack the knowledge of how to deal with our ever-shrinking markets, but we don’t even know who should deal with it.
And it seems as though the market forces we created are now stronger than us. This sounds super apocalyptic, but it is true. The credit crunch became a financial crisis, which is now about to become a perpetual economic disaster. Whilst the stocks crash all across the continents and banks go bust, business owners are already forced to declare bankruptcy. Brokers are seen in tears outside the stock exchanges in London, Tokyo, New York and Frankfurt, even though the central banks cut interest rates like a baker cuts bread. This morning, the value of City shares fell by £200m and stocks in Frankfurt and Paris dropped by 8%, again. The Sun says a cold war started between Britain and Iceland, and the Telegraph thinks the markets will end in a “complete bloodbath”. To make the catastrophe worse, everyone has a cold.
And here the big question: Who can help us and our markets? God? Marxism? Suicide? – I don’t know, really. But it is interesting to see that the one and only big player in international economic cooperation is as quite as a dead person, since the crisis started.
And yes, I’m talking about the EU. For about 60 years we have given more and more economic sovereignty to our friends in Brussels and now we ignore them. We ignore the very institution that could maybe be the only rescuer in this awful situation.Even though it was first planned to try a EU move and centrally coordinate all emergency measurements; at least after the Merkel Move, it was clear that all countries would have to fight for themselves. Hours after a meeting with Gordon Brown, Nicolas Sarkozy and Silvia Berlusconi, promising a EU solution to the crisis, Merkel guaranteed all savings in German banks (the Economist reports that this pledge is worth more than €1 trillion). Those nations fearing that the German move might destroy their banking system (even more), copied the move quickly. Hours after Sweden followed the Merkel move (which actually was the Irish move, as they were the first to guarantee the money in their banks, but the alliteration Merkel move just sounds better in headlines) Swedish banks are said to have advertised in Finland that investors should bring their money quickly to Swedish banks to be save, thus forcing the Finnish government to react as well.
French Prime Minister François Fillon even thinks it’s “logical” that the nation states and not the überstate EU deals with the crisis. But the real reason for this nationalist approach to the crisis was put into words by German finance secretary Peer Steinbrück. He said: “We as Germans don’t want to pay into a big pot where we don’t have control and don’t know where German money might be used.”
He is right, there is this fear that some taxpayers in some countries will have to pay for the problems caused by other countries. For example, many people on mainland Europe strongly disliked the Turbo Capitalism of the City of London and are now scared that they would have to pay for it. In the same way as British taxpayers would not want to pay for the disastrous management of Icelandic banks.
However people feel about it, a EU-European approach would be the best thing at the moment, keeping in mind that we know that the EU has been great in dealing with economy for the last 60 years. Why would Brussels not be able to deal with this crisis?
We should give Europe a chance.
Schreiber

IS SOCIAL DEMOCRACY DEAD?

I think its fair to say that, from a political point of view, Gordon Brown is as dead as disco. His political insignificance is increasing from day to day, and the chances of him ever winning an election are as slim as Nicky Hilton.
But lets have a look at other countries: How do Labour or social democratic parties do on the European continent?
Many social democratic leaders seem to face (or have faced) similar political problems as Britain’s former Chancellor of the Exchequer. Germany’s Gerhard Schröder for example was once relatively popular, just like Brown. His No to the Iraq war made him be (together with former French president Jacques Chirac) respected by many, even though many other domestic decisions might have been of less greatness.
Today, Kurt Beck leads the German social democrats, after Schröder lost the election in 2005. Mr Beck is now, as junior partner in Angela Merkel’s so-called “Grand Coalition”, even more unpopular than Brown, and I doubt that he will ever be able to become German Chancellor.
The other country in which social democracy faces similar problems as in the UK is Spain. The election in March 2008 was big news across Europe, especially because the Spanish Kingdom was strongly divided. On one hand there was Mario Rajoy, a boring right-wing nebbish who seems like a poor actor trying to impersonate former Spanish PM José Marí Aznar. On the other hand, there was the (already relatively unpopular) PM José Luis Rodríguez Zapatero, who narrowly won the election.
Today, Zapatero is as unpopular as Aldi. This is to a large extend because of the economic situation (Spain’s unemployment rate is 10.7%). Very much like Brown, it is not only Zapatero’s fault that we ended up in this not too entertaining credit crisis, but both are incapable of dealing with the problem. The awful consequence is that this might now lead to Spain and Britain getting two politically incompetent PMs. The United Kingdom might soon have a Frisbee-throwing (how utterly ridicules are the pictures of David C. on holidays?!) PM David Cameron and Spain might return to Aznar-like politics (even though the Spanish conservatives are moving closer to the political centre).
It will be interesting to see if Europe’s social democratic and Labour parties will be able to recover from their leaders’ political inabilities in time for the next elections.
Schreiber

EUROPE AND SOUTH OSSETIA

Only 75’000 people live in South Ossetia. Nevertheless it might very well become one of the most controversial hot spots of this decade.
How should Europe react to the problem? Mainly, Europe will need to start speaking with one voice. At the moment we see Britain, France and Germany saying nothing actually helpful. Chancellor Merkel’s spokesman demanded "an immediate stop to any use of force” - This statement certainly will not end the escalating crisis.
PA reports that UK Foreign secretary (and wannabe PM) David Miliband fears that the conflict might spread to other parts of the region (as it has happened by now, with Russia sending troops to Abkhazia). But he does not seem to have a plan to solve this problem (surprise, surprise!).
The best idea comes from one of the new EU members: Poland’s Foreign Minister Radoslaw Sikorski called for an emergency EU summit to debate the war in Georgia. This is indeed the best idea so far. At some sort of special European Council the EU leaders could come up with a common resolution and bring peace to the troubled region.
Sweden's Foreign Minister Carl Bildt agrees with his Polish colleague and demands a "very strong response" from the EU. In order to present such a response a meeting of the EU leaders will be necessary.
This Council (the official name for meeting of EU leader) would have to be organised by the French, as they hold the EU presidency at the moment. But this meeting could be highly confrontational, as EU countries have very different approaches to the problem. On one hand you have the Sweden, several central-eastern republics and the Baltic countries, which strongly support Georgia. On the other hand you have France and Germany, two countries that keep relatively quiet about the entire problem. Nevertheless, the EU will be able to reach a common South Ossetian/Abkhazia policy.
Would Russia and Georgia stop bombing each other after the EU comes up with a statement? Probably not. But at least the EU would have a common negotiation basis. A Europe speaking with one voice has a far better chance to solve the problem that any other country, including the USA.
Schreiber