Thursday, June 28, 2012

The problem with Angela (and Bill)

This is really a couple of posts in one but hopefully it will make sense.
As a compulsive news reader, the Eurozone debt crisis has kept me riveted for months. Spider less so - he seems to prefer chasing seagulls or sitting on Geno. 
Throughout the crisis, Germany's Angela Merkel has played hardball - no Euro bonds, bailouts only in exchange for strict fiscal discipline of the sort that has driven the Greek economy into the ground in the last 18 months (Greece's government debt has increased since the implementation of fiscal austerity measures), and a push for greater fiscal union in the Eurozone with oversight of national budgets by Brussels. All this has made her extremely unpopular in some quarters, with some cartoonists comparing her to Adolf Hitler, or drawing her with a little pickelhaube, thus (cartoon used with permission):














So what, we have been wondering, is Mrs Merkel's problem?
Last week a photo tipped us off. If you look at this you'll see that Mrs Merkel is sitting in a meeting with some Very Important People but NO ONE HAS PROVIDED HER WITH A COMFORTABLE CHAIR.

No wonder she gets grumpy. The chair is clearly designed for a six foot man - she looks like a 5'4" woman. She's sitting on the edge of the chair, and it's too high. Give the Eurozone and Mrs Merkel a break - get her a chair she can be happy in. Please, for all our sakes.
So how bad can this be, I hear you ask. Well, the long-standing possibility of a break-up of the Eurozone has now found its way into polite conversation (they have just been kicking the can down the road for two years, now). An article in Der Spiegel outlines the problem as it stands at the moment. Accompanying the article is some graphics (see LHS), the scariest of which shows the predicted effect of a break-up of the Eurozone on European economies.
The average predicted unemployment rate is about 13%, rocketing to 27% in Spain. Combined with the loss of output, in an urbanised society, this is a depression by any measure and a formula for serious political unrest.





















But we need not worry, apparently. In his latest brain fart, Finance Minister Bill English has told farmers they should focus on helping grow a more competitive Kiwi economy rather than spending too much time worrying about the gloomy state of offshore economies.
Memo to Bill: Europe's woes are already impacting on China, and this in turn is affecting us directly, and our largest export market Australia. No point blathering about what we can control - we can't control anything. We're hideously exposed to the interconnected global economy, and no amount of telling farmers how to suck eggs is going to change that. 
Better dust off Plan B.