Daily Archives: September 3, 2013

If Germany’s economic model is the future of Europe, we should all be quite troubled. But that is where we seem to be going. The apparently successful re-election campaign of Angela Merkel, the Christian Democrat chancellor, promises “Germany’s future in good hands”. More, in other words, of the same. The policy response to the eurozone crisis is likely to remain a programme to induce member states to follow Germany’s path to competitiveness: cutting the cost of labour. Make no mistake; that has been the basis of the nation’s export success in the past dozen years; and exports have been its sole consistent source of growth in that period. But low wages are not the basis on which a rich nation should compete. 

The repeated use of chemical weapons against the Syrian people has brought the civil war to a new diplomatic and political boil. Yet none of the military options being canvassed – or, in the UK, rejected – promises a decisive shift in the course of the conflict. We are not yet anywhere near the nadir of the humanitarian crisis already consuming five countries at the heart of the Middle East.

The International Rescue Committee has just completed a six-week audit of the situation in Syria and its neighbours. The litany of suffering is grim, the dynamics are all going in the wrong direction and the prospects are bleak. For geopolitical reasons, as well as basic humanity, we need a fundamental step change in the scale of effort. 

This week’s heavy schedule of data releases will likely have a big, if not determining, say in “when” and “how” the US Federal Reserve tapers its quantitative easing programme – that is, start moderating its exceptional support for markets and the economy. And while most assessments will focus on the timing, scale and scope of the policy adjustments, the “why” will be as important, if not more so in shedding light on what may lie ahead.

The context, while quite well known by now, is worth mentioning given its relevance to the outlook.