Speaking of an unhappy bunch…
We’re beginning to feel sorry for Europe’s economy. Faced with intractable economic problems, they also have to contend with the counterparts around the world telling them to ‘hurry up and fix’ their problems.
It’s like Europe’s economy is a chair with a broken leg. People want it ‘fixed’ so they can sit down.
RBA Governor Glenn Stevens’ legs are obviously getting tired. ‘We’re fast coming to a point where parties who have to come up with a solution have to hurry up and do it,’ he said today.
Today’s SMH quotes Westpac’s Gail Kelly as saying: ‘What’s happening in Europe is a major concern and not improving. The various authorities in Europe actually have the capacity to deal with these issues – I certainly wish they’d get on with it and do it.’
Being bankers, we assume both Stevens and Kelly think a little money printing will do the trick. Printing money works for bankers, but it’s not too good for society as a whole. The Germans know this.
But the Germans are wrong too. They are trying to maintain a structure that is fatally flawed. Unless they agree to a fiscal union – where one country’s word is everyone else’s bond – the Eurozone is doomed.
Perhaps that is why German bond yields are starting to edge up? Maybe that’s the market guessing that Germany will sacrifice its good credit for the sake of the Eurozone.
Whatever it is, the Europe’s economic situation in is far more nuanced than most outside observers think. And where advice from Australia’s bankers is concerned Europe should tell them to look after their own backyard, because the China party is coming to an end.
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