Streetwise Professor

May 23, 2012

Train in Vain

Filed under: Economics,Financial Crisis II,Politics — The Professor @ 8:38 pm

Francois Hollande took the high speed train from Paris to Brussels for the latest EU summit.  He might as well have stayed home.  As the FT headline put it, “European Leaders Put Off Key Decisions.” Whoa.  That’s never happened before. Ever.

In inimitable Euro fashion, they promise-promise-to do something at their next meeting in June. Like what’s the hurry?

Although Hollande’s train trip was apparently an affected display of frugality, my initial thought on reading the headline was that it was an environmental gesture, an attempt to reduce his carbon footprint.  But that’s nothing: the Euros’ biggest contribution to a low carbon future will be that their policy paralysis will lead to a serious economic contraction that will put far more of a dent into emissions than any cap and trade scheme could ever hope to achieve: and that’s true even if Athens and Madrid and Rome-and even Paris-burn.

The Clash on Fridays – "Train in Vain" by Timmy_Ramone

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  1. Just like in the US where the courts grabbed power because Congress was happy to punt on hard issues, so the EU has protected local (i.e. national) politicians from making decisions. That cover is in part blown as people are getting angry. Such symbolism as the train trip is nothing more than an act to show that “Yes, I am doing something” – par t of the bread and circuses (soon to be no bread and no circuses) act that has gone on for the last 10 years. All this does is lay the groundwork for individual politicians and parties to adopt the modified George Washington defense: “I can not tell a lie – it is their fault”.

    Comment by sotos — May 24, 2012 @ 11:02 am

  2. Europe’s problem in tackling the Euro issue correctly, is that any proper root cause analysis will come to the conclusion that it was wrong for Greece (and a lot of other countries) to adopt the Euro in the first place. Politicians made decisions based on short term political prestige instead of economic sense. If they admit that, they open up a lot of other aspects of the “European project” which were likewise made for the sake of political expediency among the EU elites instead of things that benefitted Europeans.

    So we have this long, slow, drawn out kabuki show of EU leaders doing everything possible to not recognize reality even though it’s hitting them in the face constantly. Nevertheless, the end result is never in doubt.

    On YouTube, I occassionally see a clip of Nigel Farage, head of the UKIP party which is against both the Euro and EU membership for Britain. He’ll be on a talking heads program with some pro-European Brits who wanted Britain to adopt the Euro, and who even now can’t admit it would have been a terrible mistake. Certain politicians are so invested in how the EU is currently structured, they can’t admit very bad policy decisions have been made.

    Comment by Chris Durnell — May 24, 2012 @ 1:08 pm

  3. @Chris-absolutely right. They are driven by various non-rational forces. Prestige. Not wanting to admit a grievous error. The Germans not wanting to be blamed for destroying the European dream. Decisions made on such grounds-or decisions avoided on such grounds-usually turn out very badly. The worst mistake you can make is not knowing when to get out of a losing trade. The Euros are going to make that mistake, ultimately for reasons of cowardice, vanity, and guilty.

    The ProfessorComment by The Professor — May 24, 2012 @ 2:06 pm

  4. Don’t underestimate that “prestige” and “avoiding blame” are a political construct. If the European ideal turns out to be an unworkable con job, who gets the blame; in other words it throws the political legitimacy of the governing parties in the toilette. there is a risk that the political farce being acted out in Athens will morph into tragedy when played in a larger theater, with calamitous results. Vanity cowardice and guilt play their roll, but ultimately it is fear that is paralyzing them – for 19 years t they have not had to make the really hard choices and denial has been their modus operandi. Like most people they will continue to act out based on their experience, until disaster is upon them and us.

    Comment by sotos — May 25, 2012 @ 7:31 pm

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