With coalition talks having collapsed, the country and the continent are now wondering what happens next. Blame is being heaped on the FDP, but the party could end up suffering mightily. Germany and Europe, meanwhile, are the biggest losers.
For weeks, Germany’s debate over the refugee crisis focused on the logistics of housing and feeding the thousands arriving at the border every day. With more than 1 million refugees expected this year alone, the foremost question was whether Germans, as Chancellor Angela Merkel keeps insisting, can really “manage it.”
During the last U.S. presidential election, an editorial in a Chinese state-run newspaper declared that if Washington insisted on flouting Chinese interests (by selling arms to Taiwan, for example), Beijing should “use its financial weapon to teach the U.S. a lesson.” Three years later, America owes even more to China than the $1.16 trillion it owed then. But the increase in debt holdings hasn’t translated to an increase in leverage; quite the opposite, writes William Pesak.
Asian leaders could be excused a degree of exasperation over the ongoing Greek mess. China’s slowdown and stock-market chaos are worry enough; the last thing the export-dependent region needs is a Europe in chaos. Worse, European leaders seem intent on misreading or ignoring lessons from Asia’s own brush with collapse.
In the wee hours of Monday morning, after a marathon 17-hour session, Greece finally agreed to a deal with the euro zone that would give it enough cash to start reopening its shuttered banks, pull it out of arrears, and stave off its exit from the euro. In some ways this deal (or any deal) might be seen as a victory, pulling Greece back from the brink of the possibly disastrous expulsion from the euro—but the accepted proposal also marks some pretty significant defeats at the end of a months-long struggle, with Greece conceding to many of the conditions it fought so hard against.
That Apple should buy Greece with all the useless cash it has on hand is just a joke that won’t go away. Yet it’s true that, if big American corporations and European politicians had any imagination, they could probably engineer a bailout for the nearly bankrupt country on terms that would benefit everyone.
An evergreen joke among speakers at the World Economic Forum’s annual meeting in Davos warns against making predictions. Whatever you say, the punchline goes, will be proven wrong.
The near-global stagnation witnessed in 2014 is man-made. It is the result of politics and policies in several major economies – politics and policies that choked off demand. In the absence of demand, investment and jobs will fail to materialize. It is that simple.
The global economy is like a jetliner that needs all of its engines operational to take off and steer clear of clouds and storms. Unfortunately, only one of its four engines is functioning properly: the Anglosphere (the United States and its close cousin, the United Kingdom).
As 2013 comes to a close, efforts to revive growth in the world’s most influential economies – with the exception of the Eurozone – are having a beneficial effect worldwide. All of the looming problems for the global economy are political in character.
