Dithering Only Makes Matters Worse For EZ

Angela Merkel, Forbes’ most powerful woman in the world, is acting more like a rabbit dazzled by the headlights of the oncoming Euro Zone juggernaut as she reluctantly acts to save the Euro Zone. But dithering will get her nowhere and will only raise further objections to bailing out the Euro Zone.
To be fair, the decision is monstrous, and puts her political career on the line. The choice is between listening to the German public and restricting bailouts to the indebted Euro Zone members or fusing the Euro Zone closer to a federation of states with a fiscal body to issue debt and redistribute Euro Zone wealth. The latter is the path that most economists agree is the only way to make the Euro Zone work efficiently, however, this involves a great reliance on German economic power as well as fading sovereign independence for all member states.
But, dithering decision makers only leave voters unconvinced and underwhelmed making an unsatisfactory outcome more likely. If politicians cannot appear convinced by their own policies, the electorate will only become more wary of it too. Dithering only signals a politician’s reluctance to make a decision and leading voters to stick to what they know. For the Euro Zone, this would mean more nationalistic and unilateral electorates less willing to help out their neighbours, making exit from the single currency a more appetitising option.
Instead Merkel must risk her political career by standing up for the future of the Euro Zone. Only by doing this has she any hope of convincing the German electorate that closer fiscal integration and Eurobonds are the way forward.
The trouble is, however, that she has dithered for so long, waiting for a better course of action that the German public will be much less likely to be swept along  by her calls of European integration. Until the markets get a clear message on where the Euro Zone is heading, economic deterioration will continue, interrupted only by brief rallies, as investors and consumers keep their money locked away.
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This entry was posted in Bailout, Bonds, Debt, Euro Zone, Germany, Merkel, Politics and tagged , , , , , , , . Bookmark the permalink.

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