Two women threaten to tear the world apart

Merkel obviously disagreeing with Lagarde’s dressing preferences

 The women’s lib movement can be very proud nowadays. Suffragettes must be very happy. Their kind in a few decades managed not only to vote but to hold in their hands the fate of the globe. All that because this week became clear that Christine Lagarde, heading the International Monetary Fund and Angela Merkel, leader of Germany and Eurozone, hold in their hands the fate of all world markets and not only. Their quarrel about who has to pay to revive the global economy holds hostages all financial agents.

As it has become obvious they have grave differences over financial matters but what is probably equally dangerous may be related to their differences over how women of power should dress themselves. The hundred identically cut jackets of Ms Merkel in clumsy colours, must irritate the true Parisian Madame Lagarde, who doesn’t miss the opportunity to a kimono in Tokyo or a too colourful outfit in Kuala Lumpur. Imagine Merkel dressed in Lagarde’s outfits. Impossible! The world may lose its spin for days.

In any case those two ladies keep the 10 million of Greeks as prisoners and the rest of world population in some kind of probation, just by disagreeing over something that very few people manage to understand. In reality however the subject matter of it is very simple to grasp; the two ladies disagree on who will take the Athens bill, let alone what Merkel says about how the Parisian Lagarde dresses (see photograph).

Let us turn to other realities of life. Greeks for example are very sentimental guys and when their wives or girl friends are dancing they don’t mind the cost of the orchestra. They pay them all with borrowed money and then ask Merkel to contribute. Think of this woman, under the light of her dressing preferences, to be asked to share the cost of the Greek feast? Madness! And the Greek feast lasted for more than ten years starting after the introduction of the single euro money.

For years German and French banks thought that the creditworthiness of the Greeks, was just like in Germany and lend them hundreds of billions of euro at an interest rate similar to the one Berlin was paying for its debts. It was not only the Greek government that found this arrangement very convenient and borrowed heavily. The entire Greek population borrowed cheap money from the country’s banks, which in their turn borrowed from French and German lenders. The Greeks stopped borrowing only when their big lenders in Northern Europe were left out of cash, and that happened after Lehman Brothers collapsed.

But let us return to the present. The antithesis dividing the two ladies over who has to bail out the Greeks, was present for months but only during this past week it surfaced in a Brussels Eurozone meeting, where the two sides choose not to hide any more their opposing positions. Lagarde said that Eurozone and its paymaster Germany must forgive a large part of the official Greek debt held by European governments and the European Central Bank, while Chancellor Merkel insists that there are more ways to support Greece.

Of course the idea is not to help Greece, but to reassure all and every financial market that Athens will not trigger a new world credit crisis. A Greek tragedy may threaten to destroy the meagre US and global resumption of economic activities. And mind you a Greek bankruptcy will not be at all a small thing. The Greek government owes €360 billion but this is not the end of the story. Greek banks owe to foreigners more than that and they need nothing less than €50 billion to recapitalise. But who is willing to lend money to all those Greeks? Nobody, exept those who may fall together with Athens! And that is why Merkel wants to alleviate the cost to the German taxpayer of bailing out Greece. In reality Merkel wants also the US, British, Russian, Chinese, Brazilian and why not Indian taxpayers to share the Greek cost through the IMF. At this point Lagarde enters and says NO!

If the matter is not solved soon, a probable Greek tragedy may be staged with repercussions that can exceed the damage the global economy suffered in the aftermath of the 2008 credit crunch. Major English and German language media insist that Merkel, by refusing to bear all the Greek cost, is protecting her government’s coalition parties prospects in the next general election in Germany, scheduled for September 2013. The truth is far away from that.  For one thing the major opposition socialist SDP appears much more willing than Merkel’s CDU to help Greece.

By the same token Germany’s Greens by being very friendly to Athens over the past two years are gaining political grounds. On the contrary the liberals of FDP, the junior partner in the Berlin governing coalition, by opposing any help to Greece, are being threatened with political extinction losing all regional elections.

It is true that some major German media groups are following a populist anti-Greek stance, which might not truly reflect what the average man in Berlin streets thinks. Probably the reputedly badly paid Germans might think in the back of their minds, that if their government starts being generous to Greeks, why not do the same for its own people? But this is something the average employer of the country wants to avoid. Think about this!