I read this New York Times article (June 9. 2012) – Europe Needs a German Marshall Plan – by a history professor at Harvard Charles S. Maier with some interest. And then a few days later (June 12, 2012) – the other end of the spectrum appeared – Why Berlin Is Balking on a Bailout – written by the conservative (but difficult to stereotype) German economics professor Hans-Werner Sinn. The two articles demonstrate that selective versions of history always fail, especially when they are overlaid and driven by a blinkered ideology that prevents a full understanding of why things happen. The Harvard historian understands how European reconstruction occurred and has articulated what that means for the current European malaise. The German economics professor, imbued with Ordo-liberalism, cannot see beyond his blinkers.

Its a public holiday in Australia – Queen’s Birthday – so all is quiet. Why the Queen of England is also the Queen of Australia and our Head of State is one of those puzzling things that escape logic. Anyway, for the record, the latest Eurozone development – the request of a 100 billion euro bailout from the Spanish government – does not address the major problem facing the Eurozone – the Euro itself. The intransigence of the EU elites has meant that they are unwilling to reform the poorly designed European monetary system and seem to think that a sequence of band-aid remedies which only buy a little time without addressing the main issue demonstrates leadership. Meanwhile, the real economies deteriorate further and unemployment rises. The current policy proposals that are abroad in the Eurozone, are, in my view, the anathema of leadership.

It is Friday and I have been reading poetry. Then I read some ECB statements and some Spanish government documents after some number crunching (not reported here). And as usual I conclude the elites in Europe still think they will bluff their way through a deteriorating situation – some 4 years or so after it began – and stick to their ideological precepts as if there is no tomorrow. The problem for them is that the rest of us including bond markets, households, private firms and banks don’t follow the script that the Troika have written. Madame Lagarde can strut around on her tax-free salary telling Greeks they should pay their taxes and that it was payback time but that does little other than to make her look poor while the situation worsens. The Spaniards, facing bank failure, crippling unemployment generally, and specifically, more than half of their 15-24 year-olds jobless and, presumably, becoming alienated and dislocated from mainstream ambitions, came up with a plan that might have eased their own problems (for a while). It seems that the plan would not violate EMU rules. The right-wing BuBa types however, obsessed with an imaginary fear that inflation is about to swamp the Eurozone and end life as we know it, responded as only they can – by posing a non-problem while leaving the real problem to deteriorate further. A poet and a playwright could not have come up with text portraying this level of paralysis and madness even if they had tried.

I regularly check the data for Ireland to see how she is going, given that the Irish government was the first to impose the austerity solution in early 2009 – that is, three years ago. I read yesterday that “of the countries that were in trouble, I would say Ireland looks as if it’s the best at the moment because Ireland has implemented very heavy austerity programs, but is now beginning to grow again”. That created some cognitive dissonance for me. Was I dreaming when I last looked at the Irish national accounts data? Surely, I hadn’t made a mistake when I concluded that the last two quarters of 2011 recorded negative growth as Irish exports slowed in the wake of the emerging double-dip recession in Britian? When I reviewed the data today, it seems that Ireland is still going backwards and people are becoming poorer. Claims that Ireland’s austerity approach provides a model for other nations to follow because it produces growth cannot be sustained from the data. But if only it were true … Oh Ireland, if only you were growing.

I am still in Darwin today and have limited time to write. It seems, however, that the Euro bosses have gone all growth on us. For non-English speakers – going all growth on us – is terrible slang meaning are they becoming enamoured with the idea that growth is important. Apparently, austerity is “so yesterday”, if not “last week” and the mantra is now about “growth compacts”. Forget the fiscal compact which most of the EU states have signed up for which if realised will drive their economies into the ground so harsh are the proposed rules on budgets and public debt. Now there is a growth compact proposal – which Mario has suggested Europe follows. Angie is right in behind him – has Madame Austerity – has gone all growth on us too?. It has been a bad week for the Troika (IMF, ECB, EU) – what with the UK now officially in a double-dip due to the deliberate strategy of its government (emulating the EMU) and across the Channel, the impending success of François Hollande is now becoming obvious. Merkoz will now have to morph into Mollande. And while on “olland”, the Dutch government also collapsed as a direct result of the backlash over the fiscal austerity. Apparently, the likely new French president is not particularly keen to join the fiscal austerity conga line although all his public statements to date would suggest he is committed to the SGP principles. So what is this all about? Are the Euro bosses going “all growth on us”? Answer: there will be no “growth compact” other than in the title of some EU Summit paper. The growth spin is mounting but the EU elites remain firmly wedded to doing everything they can to undermine growth.