Thursday, 20 October 2011

Rob Burgeman: Pre-stressed Concrete

A series of polls in Germany has highlighted the difficulties that European leaders face in steering the Eurozone rescue package through the stormy waters of public opinion.  According to a poll in Stern magazine, 80% of Germans oppose making a personal financial contribution to help Greece, while, in a separate poll for Frankfurter Allgemeine, 75% say that they do not trust the Euro. Perhaps this can be explained by Germany’s experience following the reunification of the country two decades ago and the huge costs in trying to rebuild the East German communist economy. After all, they are still paying the “temporary” tax to cover this.

Key Eurozone figures held an impromptu meeting yesterday in Frankfurt and further meetings are expected this weekend, although expectations of any definitive action are fading fast. The forthcoming G20 summit in Cannes is a more likely venue to produce more concrete proposals.  Splits are evident. Nicolas Sarkozy – with one eye increasingly on the forthcoming presidential election following the French socialist’s decision to unite behind Fran├žois Hollande – is keen to cement his reputation as a man of action.  Angela Merkel, for the reasons outlined above, is keener to slow the speed of radical reform to a pace that can be delivered to an increasingly sceptical electorate. 

A report in the FT overnight that the European Union’s estimate of the amount of capital required by the banking sector might be as little as €80 billion further heightens the sense that, rather than tackling the issue head on, the problem of bank recapitalisations may be mired in the backrooms of Brussels. I, for one, would not be very happy being inside an office built of the materials used to construct these “concrete” proposals

No comments:

Post a Comment