Thursday, July 5, 2012

Europe: Not Yet Toast

The Lehmann Letter (SM)

The casual observer of European events is tempted to throw up his or her hands in despair and conclude: THEY’RE TOAST!

Not so fast. Don’t be dragged into the details. Keep the big picture in focus. Every crisis has brought new progress. New challenges have brought new solutions.

You needn’t be thoroughly familiar with current events in order to see history, as well as progress, unfolding. A stronger Europe is being forged before our eyes.

See, for instance, this article that appeared in July 3’s New York Times.

“Europe’s Banking Chief Wields New Power in Crisis”

The article’s opening paragraphs said:

“The spotlight in the European debt crisis has now shifted decisively toward the influential leader of the European Central Bank, Mario Draghi, who emerged from the recent summit meeting in Brussels with new powers and stronger backing to address the Continent’s financial woes.

“Political leaders took significant strides toward making the central bank more like the United States Federal Reserve, giving it authority to oversee the euro zone’s largest banks and, once that new regulator is in place as soon as the end of this year, a likely role in rescuing Spanish banks with capital directly from the European rescue funds.
“Many of the longer-run plans under discussion, like European deposit insurance, would mean shifting further responsibilities toward the bank, arguably giving Mr. Draghi the most influential executive powers in Europe.”
These are just pieces of the final puzzle. But they are falling into place.
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© 2012 Michael B. Lehmann

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