Monday, September 27, 2004

How Americans see it

There is an odd little editorial in the Wall Street Journal Europe today. Entitled A Trojan Horse, it deals with the rather perplexing reaction to the unsurprising revelation that Greece had “cooked the books” to get into the euro.

So unsurprising was it that “the euro barely budged” on the day this staggering piece of information was made public (together with the other equally staggering piece of information that what with Olympics and one or two other things like not putting large expenditure into the budget, Greece was seriously over the supposed 3 per cent limit on deficit).

So the financial market does not care, which is not suprising, as the editorial notes, since Greece is hardly a top league player in it. The fact that Italy and France, to name but two, had also “finangled [their] way into euroland” is not mentioned in the piece, but cannot be far from the minds of those financiers.

On the other hand, there seemed to be unexpected political squalls in response to the Greek announcement, with Jean-Claude Trichet, whose appointment to the European Central Bank Presidency, could also be said to have been finangled, tore his hair out metaphorically, announced that this was a “real enormous problem” and euro-zone interest rates might have to rise now that the cat is out of the bag.

Some national politicians have also fainted with the horror of it all. But, there it is, the financial markets remained steady. What conclusion are we to draw from it all, apart from the fact that French bankers may be too excitable for their own good?

Commendably, the WSJE tries to be stern about it all, while many of us simply snigger:
“The EU already has a credibility problem over its excessive-deficit procedures following the Franco-German power play over their deficits last year. Now it appears that even the numbers on which those deficit procedures are based may not be credible in every case. In combination, the two episodes suggest a situtation in which the EU’s attempts to impose fiscal discipline on euro-zone members are one by one being exposed as feckless, hence the vehemence of the institutional reaction to the Greek scandal. Those responsible for the euro seem to be aware that this succession of embarrassments can continue for only so long before people begin to ask seriously whether something is well and truly broken in Euroland.”
Quite so. One is reminded of Oscar Wilde’s quip about nobody being so heartless as not to laugh at the death of Little Nell.

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