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Buying inflation?

Posted by Richard Friday, December 02, 2011


Since when did printing money ever do anything in the long-term, other than buy inflation – the wrecker of economies and lives? Yet this is what Ambrose is most earnestly recommending as a temporary "fix" for the solvency crisis in Italy and Spain.

He may well be right in the short-term, but Ambrose goes on to note: "This does not solve the 30pc intra-EMU currency misalignment between North and South, of course". That leads one of his commenters to note, somewhat acerbically, "It's the Eurozone, stupid".

And this is the issue. The more the "colleagues" thrash around, trying to solve an unsolvable crisis, the worse it is going to get. By such means are the pressures building until they become so great that an explosion is inevitable.

But for the moment, short of anything constructive to do, the Great Leaders are indulging in grandstanding. Last night, it was Sarkozy's turn, addressing a 5,000-strong crowd of his faithful in Toulon. Today we have Merkel strutting her stuff and then, on Monday, we have the Merkozy duo, doing an imitation of the Franco-German motor of integration – the power plant recently salvaged from the Trabant pictured.

That then clears the way for the soap opera of the European Council on Friday, condemning hundreds of witless hacks to hours of immeasurable tedium, while the heads of state, etc., play out their charades.

What they are all coming up with now, though, is dribble. The markets have fully sussed that eurozone ministers are mouth and no trousers, Merekel is bound hand and foot by the Karlsruhe judges, and her own receding electoral prospects. Come solution or (more likely) collapse, the likelihood is that she won't be around as chancellor to see it happen.

Meanwhile, Sarkozy isn't playing ball anyway. Reasserting Gallic manhood, he told his faithful last night that: "France will push with Germany for a new European treaty refounding and rethinking the organization of Europe."

So, after 60 years of economic and political integration, rolling out the Monnet method, the dwarf now has the magic potion that will cure all ills. And this, he says, has national governments to continue to hold sway over key strategic and political decision-making in the European Union.

"It is not by going down the path of more supranationality that Europe will be relaunched", he says.

So, we are either back to the Directoire, run by France, the Franco-German Axis or an intergovernmental "core group". None of those will play well in Brussels, where such plans will have all the longevity of a toilet roll in a dysentery clinic.

However, apart from being dismally predictable, even the dwarf seems dimly aware that he has a problem. Deploying understatement of Ango-Saxon proportions, the told his audience yesterday: "We do not hide it. Europe could be swept away by the crisis if it does not get a grip, if it does not change".

The main thing he got wrong there was the "could", but the little man always did lack vision. Perhaps he should have gone to Specsavers. Then he could read Raedwald. And we can always daydream.

COMMENT: "ANOTHER MILESTONE" THREAD