Amidst anticipation that the UK-backed plan for pan-European fiscal stimulation will fail, the German finance minister is actually taking a courageous stance to appeal for calmness and logic amidst the market chaos. It is really laudable, but the tough part is getting the majority (other European countries) to listen. Like he says, they are all acting under pressure to just do something to answer to their people. In his words: “We have a bidding war where everyone in politics believes they have to top up every spending program that has been put to discussion. I say we should be honest to our citizens. Policies can take some of the sharpness out of it, but no matter how much any government does, the recession we are in now is unavoidable. When I look at the chaotic and volatile debate right now, both in Germany and around the world, my impression and concern is that the daily barrage of proposals and political statements is making markets and consumers even more nervous.”
I think that is a fantastically frank account. He goes on to admit that he doesn’t have a panecea, but that he believes going down the “joint European approach” without knowing the exact effects is not a good idea. Its great to see that there is someone willing to not go with the herd and try to do something right, bearing in mind policy mistakes of the past.
I suppose this is an endless cycle played out throughout the advent of democracy; where kings used to simply increase their tithe in times of need, democratically-elected governments risk being toppled by people power. Which may not be the most logical path to take sometimes.
What this means for plain ol’ me is that I now got to watch the GBP really carefully. If they do listen to Mr Steinbruck and not rush out a mega-billion recovery package, the pound may not drop as much as I think it would. And that’s going to affect the amount of money I can change and take over to the UK.
