What’s the short term plan for the EU?
Sometimes it is smart to look, at the more humble news stories in
obscure papers. It just might make some pieces fall into place:
A quote from a European Newspaper
“Margrethe Vestager is going to an extraordinary session in Brussels
where it will be attempted to negotiate a deal about the new rules for
the bank’s capitals, a top priority during the Danish chairmanship I
EU – and before leaving the post to Cyprus in July.”
1. Schäuble has made it abundantly clear that a solution has to found
before the end of June – you can call it Tobin-tax or whatever –
Schäuble isn’t going to let semantics get in the way. There are a
couple of ticking time bombs in the Spanish (and presumably Italian)
bank system. My guess is that there are some CDS maturing with all the
accompanying theatricals that the Greek drama had. And we want to
avoid involving an inexperienced Cypriote chairmanship adding to the
confusion.
2. The French election has to take place: Either Sarkozy is reelected
– which will be fine, as he knows the score – or Hollande is elected,
which will take about a week of blunt talking before he is up to speed
– the real concern here is that Hollande doesn’t strike you as a
rocket scientist: A crook you can deal with; a dimwit is quite another
matter – Hollande might surprise positively; but you can’t bank bank’s
on that.
3. The British will have to stay put until the Euro-zone countries are
ready to deal with them. There are some minor other problems that will
have to stay under the lid until later. The Danish CB has promised not
to raise interest rates until the end of June. So Danish CB CEO will
have to manage the Danish banks for the time being. The Dutch will
have to get their act together and govern their country – and not
distract the major issues with permits to smoke pot. The Belgians
finally seem to have gotten that message as well.
So Vestager has been told: “Haul Your big butt to Brussels – You have
work to do!” (Somewhat unjust, as Vestagers butt is quite nice – from
what I can observe).
“It is an important indirect component of growth. If we get a stabile,
solid financial sector that you can have confidence in, then you get
the financial infrastructure as well – which helps provide business
and privates with credit.
It is sometimes underestimated in our discussions about growth”, says
Margrethe Vestager.
Fortunately Vestager knows what she is doing and is reasonable clear
about the priorities for the immediate future:
The banks will not be allowed to drag down the European economies.
Banks and hedge funds are well advised to note when a German finance
minister (Schäuble) is on the war path – and note the German domestic
politics is reasonably under control – yes there are some minor
strikes.
All over Europe there are some manifestations of the extreme left wing
and their counterparts on the right wing. They demonstrate –as is
their right – but the only thing they are going to get from screaming
is a sore throat. The crisis might be as bad (or worse) than the
1930’ies; but politically it is a whole different ball game. For
starters the unions seem to be much more sensitive to which side of
the bread is buttered –and there is not much to spread. But most
important: Banks will not be allowed to fool around as they think they
have a right to – they are going to learn the painful way that they
have to toe the line.
Once that misconception is out of the way – that the banks are cash
machines and nothing else, EU can get down to business and start
solving real issues.
