Obama vs Ms. Merkel

by truthbetold Sun Dec 11, 2011 7:44 pm

http://www.nytimes.com/2011/12/11/world/europe/euro-crisis-pits-germany-and-us-in-tactical-fight.html?pagewanted=2&_r=1&ref=business

The NY times article captures the two different approaches to the problem with some analysis.

Whose approach is correct? We may have to wait few days for market to say but few months before national economies have their say.

May be Merkel's approach is right for a loose union of nations like Euro Zone vs a strong union of people like USA.

by Kris Sun Dec 11, 2011 8:29 pm

Merkel is right about the anglo american over- infatuation with the financial industry taking away from developing a robust competitive economy, but the solution is drastic. Obama can be rightfully proud of heading off a global depression at the pass. The short term consequneces cannot be ignored. You don't want a surgery that is a success, but the patient dies.

by Kris Sun Dec 11, 2011 8:34 pm

I also think that the Germans' attributing Obama's stance as being due to ensure his re-election is cynical. The man did face a crisis in 2008 and he is right to be worried about the global fallout of the euro crisis. He has a right to his opinion.

by truthbetold Sun Dec 11, 2011 9:26 pm

The big distinction between 2008 us action and current german action is the difference in the structure. USA was unified entity for more than 200 years and people shared each others pain for a long time. So the problem for USA in 2008 was purely a question of national revival. It is a huge economics strategy issue but it never was a national sovereignty issue. The behavior of all receiving parties is controlled by US constitution.

German problem in 2011, the structural issue was paramount. Greece and Italy could take all the help they can get and cling to their old policies for electoral regions. Only tool for Germans to change behavior is wait till they reach the precipice. Only then Italy , Greece and France have agreed to German vision.

Now that German's have the basic agreement , will they indicate some flexibility to solve the short term needs of the long term problem. Germans may have been hindering triage actions and letting the patient bleed a little bit more. Their utterances of the past does not inspire confidence. We may be in for some more volatile weeks and months. Alternative is that the financial markets compromise with Germans and settle to move forward with an unsettled eurozone.

by Kris Mon Dec 12, 2011 4:38 am

The history is certainly different, but the issue now is what the consequences of lack of decisive action would be. The german view to use this opportunity to impose much needed discipline on the zone is understandable, especially when they are pretty much the last one standing. Maybe this is tactical posturing, but the serious worry is this cure could make matters worse and worse yet, trigger a deep recession that will jump the atlantic

by Kris Mon Dec 12, 2011 4:42 am

by decisive action, I mean along obama lines

by truthbetold Mon Dec 12, 2011 11:48 pm

Markets seem to say (at least for a day) that Merkel trick isnot going to work.

They are saying "show me the money". enjoy .

https://www.youtube.com/watch?v=ZTFJocQBLyE

by charvaka Tue Dec 13, 2011 2:55 am

For all the hullabaloo about this agreement, last week's non-agreement turned into a treaty is IMO too little too late. Treaty ratification is not automatic. If the treaty is rejected by the parliament in any country, the whole process is back into chaos. If any government decides to go for a referendum to ratify the treaty -- which some governments will be tempted to do -- that delays the process further. All said, this is inaction dressed up as agreement.

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