G8 Summit: Greek tragedy affects all

Posted on: 24 May 2012 by Anthony Page

The leaders of the old guard of economic powers met at Camp David to try to arrest the crisis in the Eurozone. But was the out come hot air or winds of change?

Euro crisis G summitThe G8 met at Camp David in the US for their annual meeting at the weekend. All the leaders of the ailing western economies were there – Barack Obama, Angela Merkel, Francois Hollande, David Cameron and others! But what did all that gas achieve?

A good time was had by all and David Cameron was privileged to have a session in the gym with President Obama – isn’t it nice those boys get on so well together! They did their obligatory walk for the media showing they were all chums and working well together solving the problems of the world in 48 hours! Topics on the table were an exit strategy from Afghanistan (France wants out asap (not stupid is our Mr Hollande!) - how come we aren’t doing the same.

The main topic on the table was the great Eurozone conundrum! Behind all the smiles and handshakes (Chancellor Merkel hugged David Cameron when Chelsea won the Champions League final – I think I would have preferred to lose had I been David Cameron), I suspect the story was very different.

Barack Obama must have sat there thinking ‘How can I get all these egos on legs to face the mind boggling problems they have and agree to do something – anything!’

Hollande, the new boy on the block and someone who has never held high office before, sits with a fixed grin on his face: ‘Will they, won’t they like me and agree to a growth strategy – they all speak English and nobody told me this!’ Merkel on the other hand, and with her eye on the main chance, sits resolute and determined not to go back on her austerity plan and to bring all these naughty boys back in line – even the new boy, Hollande! This Lady is not for turning – a great turn of phrase – Merkel recently read ‘The Thatcher Years’ and sees much of Thatcher in herself. Last, but by no means least, David Cameron sits trying to think of the sound bite he will use when talking to the British press – everyone from now on will part determine his success at the next election – he can’t make a wrong step. The other countries are there to make up the numbers and watch (Italy, Canada, Japan and Russia – Putin didn’t even bother to go!).

So what was the result of all this show and bluster – zilch! The final utterances from these leaders of the free world all amounted to nothing –‘We will pursue strategies for growth!’ They might as well not met – the simple truth of the matter is not one of them has an answer to get the world out of the mess it’s in. 

If there was a simple answer then it would have been done long ago. The bottom line is we have to pay back all the money that we shouldn’t have borrowed in the first place. Is any single thing to blame – yes, greed and the belief in all of us that we must always have more and have it now. The problem now is this contagion has undermined the basic confidence we all have in money and is slowing everything down to a virtual standstill in spending by businesses and consumers alike. Maybe we should do what they did in Japan in the late 80s – the government gave everybody cash to spend – something like a £1000 in Japanese Yen. They thought that everybody would spend the money and it would get things going again in the High Streets. It didn’t – people felt so insecure they put the cash in the bank for a rainy day and made things worse not better. 

Last week we saw the downgrading of the Spanish banks – more will follow even those in the UK– this will further exacerbate the crisis as banks will have to pay more for funds and have less to lend. It may even precipitate some governments having to bail out banks again. 

One thing is to be grateful Osborne and Cameron did what they did two years ago and cut cost – we might well have been going down the plug with the others in the Euro zone. So what happens next – not much! 

I suspect we will stumble on and hope the Euro sorts itself out. Thank God we have the pound. We are going to have to take the pain over the next couple of years and hope we come out OK at the other end. I’m just glad I don’t live in France, Greece, Italy or Spain – they are really going to learn what pain is!

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