Despite having lately laid claim to his Gaelic ancestry, these days it seems the US President has more to talk about with the Germans than he does with the Irish.
For good reason.
Obama knows that without Germany’s support of Europe’s ‘grand’ plan to rescue the Greeks (and now the Spanish) and keep the Eurozone in-tact his chances of a re-election victory in November are at best, slight.
Near stagnant economic growth and a third successive month of slowing job creation, both of which Obama blames on Europe’s failure to resolve its deepening economic crisis, means that in locating the cause, and ostensibly the solution to America’s floundering fortunes outside of his hands, the President seems prepared to stand or fall on the fortunes of Europe.
This is one of the ‘pitfalls’ of shifting national ownership of economic woes ‘offshore’.
Indeed some have countered that the source of America’s problems is its artificially low dollar which in the world of trade means that it is more expensive for its manufacturers to purchase ‘inputs’ although it does make U.S goods cheaper.
Fine if your customers are ‘buying’; not so good if they are on the verge of bankruptcy.
Others have blamed pre-election party partisanship which has remained steadfast in the face of a worsening US economic outlook; and relegated Obama’s ‘to do list’ of fiscal incentives to a mere footnote of campaign rhetoric.
This perhaps explains why at every opportunity that presents itself –publicly or privately – the President has been speaking to Chancellor Merkel about her views on a European salvage plan. He along with French President Hollande have been trying to ‘soften’ the ‘rough’ edges of the German psyche which eschews fiscal ‘excess’ and embraces ‘austerity’ as a national way of life.
Indeed, sinking more German taxpayer money into Greece and now Spain whether through the European Stability Mechanism (ESM) or through a float of ‘Eurobonds’ is not, as far as the Chancellor is concerned, a platform on which the future of Europe nor for that matter her own political future can rest.
Signs are this week that Merkel may be ‘melting’.
It seems that with her party’s endorsement of a near 5% increase in the salaries of Germany’s chemical workers, the Chancellor looks set to relax national purse strings.
Indeed, much has been made of the Chancellor’s recent comments which suggest that she may be stepping away from two of her more intractable views that:
- Neither bank or country bailouts should be funded through the ESM nor through the taxpayer backed ‘Eurobonds’; and
- London must be covered by the proposed financial transactions tax which should include all members of the European Union or least the Eurozone.
If Germany does ’blink’ it might be because Europe agrees that in exchange member states will transfer sovereignty in fiscal matters to Brussels.
Which direction Europe will go won’t be known until after their next Summit scheduled for June 28-29 – more than a week after Greek elections which will, in effect, be a national referendum on the ‘euro’.
Until then Obama and his supporters will continue to say “America can’t until Europe does”.