The Fiscal Compact puts Europe on the Wrong Track

Today the Irish  people will vote on the Treaty “on the Stability, Coordination and Governance in the EMU”, also known as the “fiscal compact”. This referendum is of paramount importance for the whole European Union.  I recently wrote an editorial on the French daily Le Monde, together with Imola Streho, explaining why we believe it to be poorly designed and economically ill conceived. Here is an English version.

Wait and See

In a moment of chaos, in which it is very difficult to even simply make sense of actual events, it becomes almost impossible to formulate forecasts. I would not be able to bet on grexit (or porxit, spaxit, itaxit, for that matter), in one sense or in another. I just wait and see.

A few things seem to be changing the broad picture, with a mix of encouraging elements, and added uncertainty.

Fact number one: The new French president is acting as a catalyst for those who are unhappy about German-imposed austerity. Yesterday’s informal council meeting, disappointing as usual, shows that Hollande has the strength to at least impose the discussion of his themes to reluctant Germans (for example the eurobonds). But it remains to be seen whether him and his newly found supporters will be able to force implementation of the measures they advocate for.

One Swallow Does not Make a Summer

The Financial Times reports  something interesting: Wolfgang Schäuble, Germany’s Finance minister, apparently is not against wage increases in Germany:

It is fine if wages in Germany currently rise faster than in other EU countries. These wage increases also serve to reduce the imbalances within Europe

Yeah! Finally! Thumbs up! Or not? Let’s see

• The same article says that the remark was probably due to domestic strikes, and not to a change of course on European matters.
• The interview was given the day before an important local election in Schleswig Hostein (lost by the CDU, by the way), and another in North Rhine-Westphalia next week.
• Angela Merkel’s reaction to the French election has been renewed emphasis on fiscal discipline and…
• Angela Merkel’s reaction to the Greek election has been, hum, let me guess: Renewed emphasis on fiscal discipline!

Let’s wait for a few more swallows, before declaring the end of winter…