US President Barack Obama is a politician who weighs his words carefully. So his comments on Monday that the eurozone crisis is scaring much of the world and that politicians here are simply not reacting quickly enough are extraordinary.
While he did not say anything that exasperated analysts and rather more clear-eyed market traders have not been saying for the last 18 months, it is the first time the US president has assumed speaking out so bluntly about it will not make the situation worse.
It is already as bad as it gets.
Here is what he said yesterday, according to Reuters news agency, at a ‘town hall’ meeting in California.
“They (Europeans)have not fully healed from the crisis back in 2007 and never fully dealt with all the challenges that their banking system faced. It is now being compounded with what is happening in Greece.
“So they are going through a financial crisis that is scaring the world and they are trying to take responsible actions but those actions haven’t been quite as quick as they need to be.”
Until now, Obama has confined himself to saying that he has confidence in eurozone leaders’ ability to find a solution, even if his actions (a few well placed eleventh hour phonecalls to chivvy EU leaders along) suggested otherwise.
His comments mark the culmination of US public pressure on the EU in recent weeks. (Private pressure has been going on for some time, including US treasury officials visiting member states.) US treasury secretary Timothy Geithner, who attended a meeting of eurozone finance ministers (actually very cordial despite acerbic comments by the Austrian finance minister) earlier this month, has gone from giving friendly advice, to what could be termed frank-talking, to statements that border on thehectoring.
Americans feel they have something to offer. They point out that the Term Asset-Backed Securities Loan Facility – which appears to similar to what is now being cooked up for the eurozone bailout fund (EFSF) - coupled with more rigorous bank stress tests stopped a bad crisis in the US becoming worse.
Now with the eurozone crisis threatening the global economy, the US is becoming much more forthright about what it feels is the best medicine for Europe.
They fail to see how the EU, and particularly the Germans, could have let the crisis get out of control in the first place. As far as Washington is concerned, Berlin should have stepped up at the beginning, way back in early 2010, and spelled out to German citizens that saving the eurozone was in their own fundamental interest.
They are also have little understanding for eurozone leaders’ prevaricating with the public about what will ultimately be needed to save the eurozone.
There is much to be said for this.
Eurozone leaders are currently in the ridiculous situation of praying that the beefed up EFSF gets through all parliaments while knowing full well that it will have to be altered almost immediately. Which all means that no one can talk too openly about themassive steps that are apparently around the corner.
Geithner’s ‘get on with it’ comment highlights Washington’s tendency to view the EU and eurozone as one single entity, rather than a set of countries with different traditions and priorities. This is natural given how every action or non-action by the eurozone has repercussions elsewhere. But within the EU, the crisis has exacerbated a go-it-alone feeling among certain member states. It remains open which vision will ultimately prevail.