After the bloodbath in financial markets today caused by the growing impression that European leaders plan to take the whole world down with them, a little levity is in order.
From the Scott Stantis archive at the Chicago Tribune.
Former Kansas governor Mark Parkinson appeared on CNBC yesterday and made the point that you don’t hear too much anymore these days with European credit markets being such a mess – that the U.S. will someday have a similar crisis.
Unfortunately, with the election season now well underway, officials in Washington are not likely to take any action to make the looming U.S. debt crisis any less menacing, in fact, with borrowing rates so low for the Treasury Department, you get the feeling that we’re whistling past the graveyard louder than ever.
Ambrose Evans-Pritchard of the Telegraph has been writing some of the most colorful, alarming, and (as far as I can tell) prescient commentary on the latest developments in the two-year old, credit market saga better known as the European sovereign debt crisis.
Last week’s Better a horrible end for Euroland, or endless horror? offered the imagery shown to the right when it appeared at his blog where, presumably, there are less strict rules on decorum than in the newspaper.
That’s Ambrose on the left.
Friday’s blog entry Europe’s blithering idiots and their flim-flam treaty attracted nearly 2,000 comments, so, clearly, as far as generating discussion, he’s doing a very good job and an opening line such as “What remarkable petulance and stupidity” does little to make readers think that they’ll be disappointed upon reading further.
Three entries yesterday for the print edition of the paper are more reserved, but not much:
- Merkel’s Teutonic summit enshrines Hooverism in EU treaty law
- Bundesbank rejects Europe’s IMF funding ruse
- EU treaty: Business leaders play down veto fears
Links to all his work appears at this page at the Telegraph and it provides a good diversion from the coverage provided by the mainstream media that rarely includes any pictures from Lord of the Rings, though I’m guessing that Balrog (as Germany) would be a better metaphor for what’s been going in Europe lately.
[BTW - if the image above is not from Lord of the Rings (which I wasn't able to verify), try not to let that distract from the significance (and light humor) of the Balrog comment.]
Anyone reading the details of the agreement forged this morning at the European Union summit shouldn’t be surprised that financial markets are offering only a lukewarm response.
In addition to a “fracture” in the union as the U.K. refused to be bound by possible financial industry regulations (e.g., a transaction tax that could hurt profits at its big banks), the agreement does nothing to shore up credit markets over the near term, most analysts now pointing to the European Central Bank to fill that role despite the clear message yesterday by ECB President Mario Draghi that it had no intention of doing so.
It’s clear that the time bombs below (from this item last week) have not been defused.
The hope exists that new involvement by the International Monetary Fund might result in providing more support to wobbly credit markets where Italian and Spanish bonds continue to be under pressure, but, Asia is still reluctant to partner with anyone in an effort to save the euro and, at this juncture, who could argue with them?
The latest headline at the Wall Street Journal reads EU Fiscal Pact Leaves ECB in Focus($) and it seems clear that markets now expect the ECB to take bolder action, despite what Draghi said yesterday. Absent that bolder action, this deal appears to be a dangerous kick of the can down the road in Europe.
Once again, the morning news is chock full of developments in the European sovereign debt crisis that requires a little catching up on my part. So far, it looks like the French and Germans have succeeded in accomplishing a tighter fiscal union that leaves the British on the outside looking in and this interactive graphic at the BBC shows the many different paths that these latest steps might lead to.
At the BBC, you can click on the various buttons along with that question mark in the middle for details. My early take on this is that eurozone members think they’re headed to the upper right of the chart while the British may have other ideas.
With just one day left to “save the euro” (as policymakers put it early last week), it appears that Lucy is about the pull the ball out from under Charlie Brown’s swinging foot one last time and, perhaps after this big miss, Charlie will wind up flat on his back and stay there.
Hopes were never very high for officials to accomplish much at tomorrow’s European Union summit (a meeting dubbed the most important gathering of this group in two years), but markets were instead placing their faith in the ECB (European Central Bank) to finally taking some sort of action to bolster credit markets.
But, after ECB President Mario Draghi spoke earlier today following the announcement that the bank had lowered short-term interest rates (a move that was widely expected) and offered banks long-term loans (a move that won’t make any difference over the near-term), markets appear to be quickly coming to the conclusion that Europe just doesn’t seem to care that they’re about to enter the abyss.
Word earlier today that the International Monetary Fund was riding to the rescue had raised the hopes of many and Bloomberg reports that European central banks are considering sending $200 billion to this group, which they’ll presumably “leverage up” somehow to a much higher amount before buying sovereign debt of spendthrift European governments.
We’ll see how that works out – it would appear to be the only hope at this point.
They’re starting to call tomorrow’s meeting the “No Second Chance Summit” after French President Nicolas Sarkozy warned that policymakers had better get it right this time, despite the fact that they’ve failed to get it right regularly over the last two years.
Something tells me that Lucy’s going to do what she always does…
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