A more exciting week, but what really happened? All the usual stories about Greece defaulting and, far more significantly as it seems, some big name European banks in trouble as a result. An emergency G7 meeting ( but not the more fashionable G20, we'll return to that ) and, by far the biggest news in our view, Jurgen Stark hands in his cards.
First to the weekend get-together in Marseilles, which the Wall St Journal describes as involving the G8, though we cannot identify the final participant. Madame Lagarde found her way into the photoshoots, so perhaps it was the IMF. Anyway, they announced in their communique that they had agreed to work together towards a solution to their problems, though according to other sources they couldn't quite agree on whether it was actually a communiqué or perhaps something less definitive. This sounds so vacuous that it might reasonably have emanated from the larger group, so why were the others not invited?
The answer seems to be that the two groups within the G20 have understood the truth, which is that they have nothing in common. The developed economies have managed the last few crises which they have created by transferring the damage to the emerging markets, but this ruse has finally been spotted, and the likes of China and Brazil no longer seem content to suck it up. Their presence in France would not have been helpful, so they were not invited.
This leaves Germany as the only major solvent economy with which the debtor nations are on speaking terms. Europe at least now has a plan, which is that they will live off German money until it's all gone - on reasonable estimates this will take about five years, so easily long enough to see all of today's big names out of their current offices and into important positions in some supranational body. However, while Angela Merkel may have sold out her country, in the footsteps of Tony Blair ( yes, that was a cheap shot at the lady, we're just making a point ), her central bankers are refusing the follow the same path. At what was admitted by officials to be "an embarrassing moment", the EBCB's Chief Economist, has resigned for personal reasons.
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