Streetwise Professor

July 30, 2012

Timmy!’s European Lecture Tour

Filed under: Economics,Financial Crisis II,Politics — The Professor @ 8:39 pm

Timmy! is in Europe, to lecture the Europeans (yet again) on the need to get their house in order.  After all, his trips have been so wildly successful before, in the same way as Rodney Dangerfield shows were wildly successful.  Or in the same way as Geithner’s “very tough” action on Libor took care of that problem.

His trip has a special urgency now, because Obama fears that economic “headwinds” from Europe will interfere with his reelection prospects.

Germany’s finance minister, Wolfgang Schäuble, has been known to give Timmy! verbal lashings in the past, and he did deliver a preemptive rejection of what Geithner is pushing Europe-and Germany specifically-to do:

Wolfgang Schäuble, Germany’s finance minister, has dismissed speculation about any Spanish request for eurozone support in buying its sovereign bonds, and ruled out making more concessions to help Greece, on the eve of talks on the eurozone crisis with Tim Geithner, US Treasury secretary.

The tough German resistance to launching any new initiative in the two most embattled member states of the eurozone looks set to clash with Washington’s constant appeal for action to stem contagion in the crisis.

Schäuble was on good behavior in the aftermath of his meeting with Geithner, and avoided the stinging rebukes he had delivered in the past.  Instead, the two limited themselves to exchanging banalities so light that it must have taken a large number of sandbags to keep them from soaring off into the heavens, like the Wizard of Oz.  They agreed that it would be a good thing to avoid a Eurozone crisis, and that everything should be done to achieve that:

The statement said that Messrs. Geithner and Schäuble “emphasized the need for ongoing international cooperation and coordination to achieve sustainable public finances, reduce global macroeconomic imbalances, and restore growth.”

The two stressed “the need for policy makers to adopt and implement all reform steps required to deal with the financial crisis and crisis of confidence,” while noting that top EU officials have said they will do whatever is necessary to fix the crisis.

Ah.  ”Whatever is necessary.”  The new mantra.  Like what, specifically?  ”Whatever is necessary.”  What is necessary?  ”All reform steps required.”  What are those? “Whatever.” Whatever (in the snotty teen sense of the word) is right.

Sort of like saying that it would be a great idea to have fat free ice cream that tastes just like Hagen Dazs.  Pretty much everyone likes the idea, and definitely nobody has the slightest idea how to make it a reality.

ECB head Mario Draghi has gone out on a limb with his “whatever is necessary” promise.  Foolishly, a lot of investors have crawled out there with him.  I’m betting that Merkel, Schäuble, and Germany generally are going to saw it off, mainly because “whatever is necessary” to save the Euro is likely to impose crushing burdens on Germany that Germans will not accept.  I can’t see any mutually acceptable bargain here.  And certainly Timmy!’s and Obama’s hectoring isn’t going to make a bargain any more likely.

Print Friendly

7 Comments »

  1. Timtim in Europe lecturing – maybe the tour can be expanded to include the creative use of tax preparation software. Othe comparisons os simillar treats that could be add3d to the show would include (by oija board) Jeffrey Dahmer on preparing finger food, John Corzine on internal controls, Bernie Madoff on investor relations, Ghengis Kahn on promoting world peace, all topped off with the Shade of Adolph Hitler singing Kumbaya. Vaudeville ain’t dead yet!

    Comment by Sotos — July 31, 2012 @ 9:02 am

  2. You mean Häagen-Dazs.

    Comment by Regulator on lunch break — July 31, 2012 @ 8:01 pm

  3. @Regulator-I do. Never touch the stuff myself. Working from memory. Increasingly dangerous at my age.

    The ProfessorComment by The Professor — July 31, 2012 @ 8:52 pm

  4. ;-) Love your work. And I don’t touch the stuff either.

    Comment by Regulator on lunch break — August 1, 2012 @ 8:34 pm

  5. Hmm…. increasingly looks like his trip was not entirely suucessful.

    Comment by pahoben — August 2, 2012 @ 10:58 am

  6. @pahoben-LOL. I can’t believe what an idiot Draghi has been. He bought himself a week with a big bluff, and now his credibility is in shreds. I can’t believe anyone fell for it initially, and am incredulous at the rally in the Euro, peripheral stocks, and peripheral credit as he was clearing his throat-who were the idiots who were buying? And then the resounding crash when he actually said something. Or said nothing, to put it more accurately.

    The huge market moves, leading to billions changing hands, makes Knight look like pikers.

    @Regulator-Thanks!

    The ProfessorComment by The Professor — August 2, 2012 @ 11:08 am

  7. It has made for exploitable trading patterns. The firing of Ben’s blank still remains in play.

    Comment by pahoben — August 2, 2012 @ 12:14 pm

RSS feed for comments on this post. TrackBack URI

Leave a comment

Powered by WordPress