Wednesday 1 October 2008

European leaders look to the United States (supplemented)

With ironic amusement and disbelief I am looking at our European leaders who themselves are looking with fear in their eyes to the United States of America, hoping for the US taxpayer to save the world.

When you hear the European Union's trade Commissioner say that everyone is waiting the US to react on the crisis, and when the Commission's spokesman Johannes Laitenberger is quoted that the crisis is US made and that therefore the US has a "special responsibility" to solve it, this does not sound like self-confidence.

It rather sounds like the little brother is looking up to his big brother, waiting for guidance although the whole family is in troubles.

It is a sign that our own leaders where relying on strength and stability of a global system de facto dominated by the United States without taking preventive measures for a scenario that was kind of foreseeable. Already during university my political economy professor told me that the US economy was based on massive debts and that sooner or later it would crumble.

And French International Monetary Fund managing director Strauss-Kahn says that his organisation had warned in April that the crisis would reach 1 trillion US-Dollar losses, but "people did not want to listen".

So please, nobody should tell that what happens today is totally unexpected, except for the fact that the mortgage gambling made thinks worse than expected.

Now individual countries like Ireland take their own measures to save their banks - with taxpayers money. The German, British, and Benelux governments step in with massive guarantees for major banks in their countries. And the European Central Banks opens its doors to provide the Euro area with money (which doesn't even work) - and asks other banks to so, too. Mhhh, money!

That is rationally handled panic.

And in this time, someone like Sarkozy is looking for Europe to "take a greater hand in global decision making".

Our stock exchanges are just waiting for the United States to take a decision on the "big bailout" (cf.: "Big Bang") - but Europe wants to lead the world. Our economies will decline because US consumption will drop significantly - but Europe wants to lead the world. British bankers cry on the streets because their US mother companies fell apart - but Europe wants to lead the world.

My interpretation of this situation is that this is not only an economic crisis. It is a crisis that shows that the political systems were not prepared for a foreseeable situation. They have to react with massive measures because they did not have any plan for more sound reactions. It is not a failure of the market economy, it is the failure of leadership.

And so everyone is looking to the United States of America. At home, we correct the cosmetics, pump in liquidity into our own markets, but the real fear factor is this funny little world power between the Pacific and the Atlantic Oceans. Europe cannot solve the crisis on its own, it has to hope and wait for his big brother. And the US-taxpayer.

The European polity only is made to correct cosmetics. It is made to make things look nice and clean. But it is not made to solve huge problems that occur with a quicker speed than the speed of our institutions - it can only hope that through its cautious work some problems do not even arise. But the Georgian crisis and the world financial crisis show that we are quite far away from being optimistic even in that respect.

European leaders look to the United States. They lead the cosmetics, but they are led but an half-dead body below the make-up that will not be healed by paint. It needs some tougher pills... let's hope that the US will find some - our leaders won't!


Anonymous said...

The European Union and the Euro are failing already. Read about The end of the Euro" at