Tuesday, October 18, 2011

Last Saturday's G20 French Farce

The Reuters report of the G20 meeting, chaired by Francois Baroin, Finance Minister of France, in Paris last weekend, opened as follows:

(Reuters) - The world's leading economies pressed Europe on Saturday to act decisively within eight days to resolve the euro zone's sovereign debt crisis which is endangering the world economy.

In unusually direct language, finance ministers and central bankers of the Group of 20 major economies said they expected an October 23 European Union summit to "decisively address the current challenges through a comprehensive plan".

French Finance Minister Francois Baroin, who chaired the meeting, said Berlin and Paris, the leading euro zone powers, were well on the way to agreeing a plan to reduce Greece's debt, stop contagion and protect Europe's banks.

Non-euro countries highlighted the damage the European crisis was already doing to their economies and underlined the urgent need for action by the 17-nation single currency area."Europe needs to get its act together because unless the crisis is put to an end, it will start to affect emerging economies which have enjoyed strong growth," Japanese Finance Minister Jun Azumi said.

His Canadian counterpart, Jim Flaherty, said the risk of a global recession would be dramatically higher if next Sunday's European summit failed to deliver.

In spite of 19 Finance Miniusters from across the world, drawn from the free world's largest and most prosperous nations, having attended this meeting as the world stood poised on the brink of the worst economic disaster in history - the Frenchman Baroin and German Schäuble, nevertheless decided to play them all for suckers. How else can we explain the initial silence and subsequent statements of German Finance Minister Schäuble especially considering the US Treasury Secretary Geitner declare the following:

"They clearly have more work to do on the strategy and the details, but when France and Germany agree on a plan together and decide to act, big things are possible," Geithner said.

"I am encouraged by the speed and direction in which they are moving."

On returning to Germany, however, and throughout yesterday, reports were issued as if none of the events of the weekend had ever occurred. The Irish Times, in a report this morning, summarises these very adequately from here. Note the following quotes:

Berlin warned twice yesterday there would be no catch-all solution to the emergency.....

Remarks by finance minister Wolfgang Schäuble and Chancellor Angela Merkel’s spokesman are seen to reflect deep divisions between Germany and France over core elements of the new rescue package.....

Dr Merkel’s spokesman, Steffen Seibert, said the search for an end to the crisis would “surely” continue into next year. “The chancellor has pointed out that the dreams building up that this package will mean everything will be solved and over by Monday cannot be fulfilled,” he said.

Can it not have occurred to the French and German Governments that such antics are entirely unacceptable in normal circumstances, let alone in today's dire circumstances. If it was the case at the weekend, as was declared on Monday, that no quick fix could be envisioned by the two leading powers of the Euro Group, should they not have so advised their opposite numbers gathered from the 18 other world's great economies, so that alternatives could at least have been considered.

In Britain's case, represented as it was by the completely hopeless Chancellor of the Exchequer, George Osborne, who has made himself cheerleader in chief for totalitarian economic governance across Western Europe, surely it is now time to learn the lesson of these events and cease acting as a mere Franco-German poodle?

Further reading for further thought, from the FT linked here.



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