They announced the stress tests' results now so everyone could enjoy the holidays as though all was right with their world.
Anyone would think that Ed Balls, New Labour’s former Education Secretary, was called in by the ECB to set the Stress Tests for Euroland’s banks, and you can see exactly why. Under his ministerial eye, or lie, Britain’s A-level exams became, well, a load of old codswallop, or if you prefer, a load of balls: the tests were designed to insure that everyone but the totally illiterate passed, and all with A grades to boot.
This masquerade, as with everything to do with New Labour, was just another load of spin, designed to pack all the graduating kids off to Uni so that the unemployment figures wouldn’t look so bad. Reality, however, overtook this and other New Labour spin-projects, as 625,000 would-be undergraduates are now being told that there are no places for them.
Well, the ECB took one look at this cunning/deception now called spin and decided the way forward for the eurozone banking system should be on broadly similar lines: set the exam bar so low that all the bust Euro-banks could easily limber under the test limits, et voila! Apart from the seven known by everyone to be bust that is, and another fourteen about to be bust, which is 25 per cent of those tested.
And even better, they would announce the results just as school broke up and so everyone could enjoy the holidays as though all was right with their world. Just as summer is greeted with universal joy, so the onset of the grim realities of Autumn cannot be deferred: the new academic/banking year of 2010 faces an uncertain future, as unemployment now becomes the inevitable focus of Europe’s declining economic prospects. Unemployment across the EU of under-25s is over 20 per cent. Not a lot of future national debt repayment potential there, that’s for sure.
When the US conducted its stress tests, everyone knew the Fed stood behind the system as the ultimate stop-gap, representing as it did a continent-wide political union; the ECB is in no such position, however, and never has been. The problem goes right back to the Euro-politicians’ dream of a common currency, which required them to set out the rules of this ambitious idea in the Treaty of Maastricht; but now all the rules of this Treaty on monetary rectitude have been broken by every single signatory!
And at the centre is the ECB, trying to manage a currency over which it cannot exert the effective control that political union would have given it: or to put it another way, there is no way it can manage monetary policy over sixteen disparate economies, where each country sets its own budget, but in a common currency. It is simply not possible.
Hence the metaphorical call to Ed Balls to come and prove the whole system is as viable as the A level system in Britain, a task for which his one-dimensional understanding of all things human is especially suited for, now including eurozone banking solvency.
Three-dimensional economic reality, however, marches on regardless of the outcome of the flawed EU stress tests. The real issue is the fact that unemployment across Europe has become part of the fixed landscape, particularly for the youth, who are the future prosperity, provided they have a future, that is: it will be very hard to repay national debts if the next generation don’t even have a job!
It’s the unpalatable fact that the Euro-zone non-taxpaying politicians can’t even begin to address this primary issue, which is the real stress-test for the EU community going forward. The immediate solvency issue will fill the media, however, as the double-dip becomes the next romp over the hurdles for Euroland’s creaking banking system in the Autumn, but beyond lies the serious issue of the currency of the long-term jobs market. As I said, enjoy the holidays.