Monday, September 3, 2012


I was in Brussels last week. The weather was nice. The city looked somewhat better than in the recent past. Still, the former East-German-like architectural monstrosities prevail. The EU as well has opted to perpetuate the latter, rather than making a statement about harmony and beauty.

The Central Bank's leader in Frankfurt is supposed to come up with a comprehensive plan to put an end to the Euro melodrama this week by cutting the benchmark interest rate or intervening in the bond market, which might be tricky given Angela Merkel's philosophy.  Simultaneously, European decision makers will meet at random and try to find a deterrent against the contradictory moves of the Bundesbank, investors and governments who seldom stick to agreed economic overhaul plans when they do not serve their own self-interest.
It is hard to see any direction in the EU at the moment since the large number of member states collide rather than cooperate. On the contrary, old rivalries and prejudices are making a come-back and dependable countries such as the Netherlands are starting to show unexpected fault lines.

The EU these days must feel at home in Brussels, capital of a country that has a unique savoir-faire in deal-making, which unfortunately generally leads to kicking the can closer to the abyss. The international media have been very critical of the EU lately, describing Europe's increasing irrelevance, being snubbed almost by friend and foe alike. I think that some of those hasty considerations are unfair but it cannot be denied that the EU seems to be short on ideas, other than being responsible for creating a taker mentality. This is aggravated,now that the ghosts of the past often appear to overtake the promises of the future. These irritants also are the result of a faulty political and economic construction, which gave while at the same time reining in. The ECB has problems intervening in a divided fiscal and political landscape. The outer world prefers to deal with individual leaders rather than wasting time with the Commission. The European Parliament is nothing but une chambre introuvable.

Individual member states are currently faced with disintegration and pre-Cold War blues.  Europe is adrift and the Euro, which was supposed to be the ultimate step to further integration, is for the moment the nemesis it has to deal with on a daily basis. It is paradoxical that the prime world economic bloc ends up being admonished or ignored by China or the United States. Draghi did not even find the time to attend the Jackson Hole meeting of global central bankers.  It is time for some white fumes to appear from the ECB, otherwise fear might set in.

I remain confident that in the end intelligence, which is abundant, will prevail, on condition that the means match the intentions and that agreements stand rather than be continuously rehashed. Still, the German, Luxembourg and Finland dissenters
might oblige Mario Draghi to propose smaller steps which might not convince the markets. The many bi-laterals this week are very crucial in this regard. They highlight the fragility of the EU as central bulwark, the weight of Germany and the diminishing status of  "the rest".  President Hollande's economic policies or the brewing Spanish regional nightmare are certainly not helpful in finding a coherent "remake" of the workings of the Euro machinery.

Draghi's toolbox is limited. It remains to be hoped that the political will will not be!

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