Berlin Again?


Duck and cover. That is the stark message bond markets are sending about the global economy. Whichever it is, something is very wrong with the world economy.

European leadership is lost in a byzantine maze of national and international parliaments, committees and commissions, not to mention plain-old historical antagonism. U.S. leaders are in an election year and are too busy fighting anybody from the other side of the aisle.

When warnings sound that the end of the euro is nigh, all eyes turn to Angela Merkel, the German chancellor. Germany must “assume its part” in saving the currency, says Spain’s economy minister, Luis de Guindos. If there is rescuing to be done, Germany is the obvious rescuer. Yet rather than toss out the lifebelt, Mrs Merkel offers swimming lessons.

She would find this characterisation unfair. Time and again she has taken stands against bail-outs only to relent. She balked at bailing out Greece and at a permanent rescue fund and she vetoed the use of bail-out money to buy government bonds in the secondary market. In each case she gave in (too late, say critics).

The American recovery began to show signs of slowing a few months ago, also. Even so, the revelation on June 1st that employment grew by just 69,000 in May, a 12-month low, suggested a more serious deceleration than anyone had imagined. The stockmarket plunged, giving up all its gains since January. Online punters slashed the odds that Barack Obama would be re-elected to a little over 50%.

People elected to lead must do just that. Now.

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