Monday, April 15, 2013

15/4/2013: About that orchestra on Titanic's deck...

In a telling sign of total disconnect with reality, last week we heard two bizarre comments from the European 'leaders' all made in the context of Dublin Ministerial dealing with Cyprus.

First, "Klaus Regling, managing director of the ESM, told reporters that the fund had had its "most successful week". The statement can on foot of ESM selling EUR10bn worth of new debt in heavily oversubscribed markets. Alas, the said claim was made in the week when ESM became the sole vehicle for handling EU side of the Cyprus 'bailout'. In other words, Regling, like rest of EU 'leaders' measures success by how high he can pile on debt (EUR8bn worth of bonds here, EUR2bn worth of notes there), not by real economic outcomes (which can see Cypriot economy shrinking 15% in one year - some 'success').

However, the weekly prize for detachement from reality goes, as it often does, to Olli 'The Delusional' Rehn - the EU Commissioner for Something-to-do with Economy - who was forced to concede that Cypriot bailout can lead to the island economy shrinking up to 15% in 2013. Never, mind, says Rehn, as "I don't deny that there is uncertainty about the precise figure whether it will 10 percent, 12.5 percent or 15 percent."

Indeed, 'never mind'. You'd think he would make it his job knowing. But, of course, why bother, since 10-12.5-15 percent range clearly might reach into 20-22.5-25 percent range as easily and Mr Rehn wouldn't bat an eyelid. Especially since the host nation's Government - aka Ireland's 'best pupils in the EUssroom' - were there to cheer Mr Rehn in exchange for getting a handful of platitudes from important foreigners. Behold Jeroen Dijsselbloem's claim that Ireland is "a living example that adjustment programmes do work". Cyprus, presumably, will be the EU's roadkill of history... joining Greece and Spain, with Italy and Portugal in the waiting wings.

In short, we are now going verifiably gaga this side of the Atlantic, begging for a comparison with the orchestra that played through Titanic's sinking. Alas, the orchestra, as historian tell, was rather competent one - unlike Messrs Rehn, Regling, et al.


4 comments:

Anonymous said...

No, no, no, my dear Constantin.
Cyprus is irrelevant. Too small to matter. We, in Ireland, had Anglo Irish Bank, (way) too big to fail. Surely you must have missed the video on "Ireland: In the business of recovery" indeed helping Europe get out of the difficult situation IT is in...Not just good pupils, we have become the Masters and show them all how it's done!

TrueEconomics said...

Ah, yes, the promotional video, alongside IDA's latest 'buy Ireland Inc' chart-deck... what can possibly go wrong when people out of touch with reality are paid too much to produce marketing materials out of touch with reality...

Anonymous said...

It is quite sad that all our efforts are turned outwards, as opposed to genuinely trying to help people in difficulty.
Is consumer demand/spending not a very large part of the GDP equation?
First sign of interest rates going up, even if not expected in the very short term, will push thousands (oh yes!!) more people over the cliff.
We'll probably blame the Troika then, based on the fact that they gave us an extension rather than a haircut. Although today it sounds like this approach merits a big pat on the back... Speechless!

belleslettres said...

I became physically ill watching that video, so I did not see its no doubt slick conclusion. Makes me want to live in a cave with a copy of Pale Fire and a few dogs for the rest of my life.