A Paralyzed G-20
All the bland platitudes coming out of the Group of 20 Meeting in Mexico can’t disguise the absence of progress on the European crisis. German Chancellor Angela Merkel is totally dug in on the proposition that Greece, Portugal, and Spain need to stick to the austerity medicine that will only deepen the collapse and embolden more speculative attacks on government bonds.
President Obama has just about no leverage in this situation. On Monday, the European Commission President, Jose Barroso, a conservative former Portuguese prime minister, and close Merkel ally, broke his diplomatic cool and declared that he was in no mood to be lectured by Americans on what Europe needed to do to restore growth.
This crisis was not originated in Europe,” Barroso said. “This crisis was originated in North America. Many in our financial sector were contaminated by unorthodox practices from some sectors of the financial market.”
True enough—but the fact that toxic American financial products caused the crash in 2008 doesn’t mean it’s a good idea for Merkel and Barroso to pour oil on the flames in 2012