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Eurospeak and Eurosleep

Debates over the ongoing Euro crisis tend to be focused on a few familiar faces: Germany’s Merkel, France’s Sarkozy, Italy’s Berlusconi, Greece’s Papandreou. Notable in his absence in the nominal head of the E.U. Herman Van Rompuy, President of the European Council.

When the post was created in 2009 and the eurocracy made it known that well known candidates like Tony Blair were not wanted, expectations were rather low. So far, Van Rompuy has lived down to those expectations, suitably demonstrated by his absence from any serious debate on the crisis threatening to tear apart the institution he heads. In an attempt to correct this, Mr. Van Rompuy addressed an audience in New York in a prelude to the General Assembly annual meeting. As The Economist notes, the results were underwhelming:

Incredibly, Mr Van Rompuy didn’t even talk about the euro until after forty minutes, and even then it was only to repeat the same old EU mantras: Greece will not default because it cannot be allowed to default (ruling out a basic step that this paper and many others see as necessary); more integration and monitoring will solve the crisis; Eurobonds are not necessary or useful. At no point did Mr Van Rompuy acknowledge the severity of the crisis—record CDS spreads, collapsing confidence in European banks, over 5% rates on 5-year Italian bonds and so forth—or suggest that Europe would be taking quick, effective action.

Instead, he waxed poetically—describing himself, in fact, as a “poet lost in politics”—about how this crisis would lead to greater European integration. He claimed that European states will act in “solidarity” by continuing to support the periphery, even if some northern European citizens object due to peculiar “sensitivities about responsibility”. After all, as northern Europe lends more and more to the periphery, it has more to lose from the disintegration of the euro zone. And, over time, Mr Van Rompuy predicted that ever-tighter fiscal and monitoring rules (some of which he will be proposing in October) will lead to greater euro-zone financial mutualisation and shared economic governance.

The rest of the world is alarmed at the rapid escalation of the crisis in Europe, and investors continue to lose confidence in European banks with breathtaking speed. Yet European leaders seem unaware that they are facing a potentially devastating collapse and not another round of fishery negotiations. In his speech, Mr. Van Rompuy is alarmingly vague and implausibly sanguine about the possibility of European states acting in “solidarity” to solve the crisis despite months of evidence to the contrary. He is similarly optimistic about the ability of Greece to avoid default. Undoubtedly he wishes these things to happen, but he failed to present any evidence that they will. This speech registers as a list of desperate hopes, not a well thought-out plan. If this is the best Europe can come up with, we may all be in for a rough road ahead.

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  • Joe

    None of these people matter. There is no evidence that they will do anything that they have to to avert default, or even structure a soft landing.

    Who it is who matter are the population that has been quietly withdrawing their deposits from the banks and stuffing it in their matresses. The othe people who matter run the hot money now flowing into the US, Canada, Singapore, and Australia… in short the places where it’s possible to repatriate money later without risk of a policy reversal on the issue.

  • Peter

    Ever hear of the Peter Principle?

    This Van Rompuy is it.

  • Luke Lea

    Gotta admit, though: with guys like Mr. Van Rompuy in charge the chances of war would go down.

  • Gene

    Did an article in a magazine called THE ECONOMIST actually propose that the ECB should promise “unlimited resources” to save the Euro? I thought economics was, in large part, the study of the distribution of SCARCE resources? And is there any other kind, by the way?

  • Jacksonian Libertarian

    The EU is finished, but there isn’t going to be any war, as the European militaries are all underfunded shrunken paper tigers with barely enough men to defend their own borders.

  • Corlyss

    Implausible sanguinity seems to pass for policy these days when it comes to the Euro crisis. I get a big kick out of “Sobbin'” Simon Hobbs’ (CNBC) hysteria when he talks about the possibility of Euro collapse. He’s done the “There be monsters” reportage for months. I’m waiting breathlessly for his “O the Humanity!” account of the inevitable.

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