Wednesday, December 7, 2011

The Scarecrows Of Europe ... Or Return To Oz

Angela Merkel and Nicholas Sarkozy, the leaders of Germany and France, respectively, are acting like the scarecrow in the Wizard of Oz.  That is, as if they had no brains.  Also like the scarecrow, though,  they do have a piece of paper which they hope will make others believe they are smart; in fact, smart enough to have come up with a solution to the eurozone crisis.  It is a new eurozone treaty proposal, and if what we have read about it so far is accurate, it may as well have been issued by the same Wizard who gave the brainless scarecrow a diploma.

It aims to further burden those members of the zone already on the critical list and struggling with crashed economies, as well as strained budgets.   In addition to maintaining them as wards of the zone without the ability to regulate their own currency, it would commit them to a regimen of fiscal austerity and constraints which will needlessly punish their citizens and make it virtually impossible to reinvigorate their domestic economies.  This should not find wide acceptance.

The only thing smart about the treaty proposal from Merkel and Sarkozy is that it plays well with their political constituencies back home in Germany and France, who smugly, if stupidly, consider themselves more responsible than all the others, and therefore in a moral as well as financial position to dictate terms.  They are ultimately going to be proven wrong on both counts.  In order to find a way out of this mess, Merkel and Sarkozy are going to have to revisit the Wizard and petition for other gifts, like the courage of the lion to face down their own outraged citizens, and the heart of the tin man to see the plight of the eurozone periphery with more empathy.  Otherwise, the European financial storm is just getting started.

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