Whistling in the Dark

Bloomberg has a headline this morning that about says it all when it comes to the Eurozone’s political leadership – “Euro Leaders Aim to Buy Time to Save Currency.” More time?

For the past 18 months there has been dithering and inconclusive summits and failure at every turn to get out ahead of the crisis. Solutions promised and offered have failed to convince the markets and investors that a bottom has been put in to save the currency from collapse and the Eurozone from fracture.

With a new year we are where we were before: no viable political solution.

According to Bloomberg, European leaders are “seeking to buy time for the Spanish and Italian governments to wrest control over their debt.” But that isn’t something that is going to happen overnight or even in a few weeks or months. And getting control of their debt is linked to how the markets feel about the Eurozone generally and the level of confidence investors have in it and not just in Italy and Spain.

Neither country has a solvency crisis – or rather they didn’t. Their initial challenge was over liquidity – and that has been allowed to turn into pending insolvency.

In her end-of-the-year comments, German Chancellor Angela Merkel said her government will do “everything” to bring the euro out of the slump. The only way that can happen is if the Germans agree financial transfers to their poorer neighbors. That has to be done quickly now and speed means Berlin accepting Euro-wide debt consolidation and the issuing of Eurobonds backed by all.

The details of closer financial integration with stricter rules on individual government’s public expenditure can come later.

In the next three months some 157 billion euros ($203 billion) in debt will mature in the 17-member Euro area. And something solid needs to emerge from the scheduled Jan. 9 meeting between Merkel and French President Nicolas Sarkozy or those three months could be even more torrid that what we witnessed last year.

A Sobering Tale

The BBC’s Malcolm Brabant has been an excellent commentator for nearly a decade from Greece.  He has been someone the BEEB could parachute virtually anywhere in North Africa, the Middle East or the Med region to get some solid reporting. He is also a fun man to have a beer with. The Daily Mail has a saddening first-person account by Malcolm of the psychotic consequences of a Yellow Fever jab that has gone very bad for him.

The Surprising Rise of Rick Santorum.

A late surge in Iowa by Rick Santorum has the chattering class…well, chattering.  The former Pennsylvanian Senator has worked Iowa hard and the state tends to reward those politicians willing to engage in close personal encounters – retail politics is all in the Hawkeye state.

But the big question is whether the sudden enthusiasm for Santorum is a reflection less of his innate skills or what he has to offer than the continuing lack of excitement for frontrunner Mitt Romney.

The GOP primary race from the get-go has been about a search by the Republican faithful for a conservative alternative to Romney. A good showing for Santorum – being in the final three – would presumably put paid to Michelle Bachmann: a poor showing for her in Iowa, a state she too has banked on, would imprison her in the low single digits from here on.

My prediction for Iowa: Romney pulls off a win because the anti-Romney vote gets hopelessly split with Ron Paul coming in second and possibly Santorum third. Curiously, Newt Gingrich just hasn’t taken fire in Iowa, despite his national surge. Maybe that’s because his field operation in the Hawkeye State was late in being formed.  Some good blog reporting by The Hill’s Niall Stanage here.