The heads of the world’s leading 20 economies (G20) have been meeting in Los Cabos, Mexico and the on-going European sovereign debt crisis has been at the top of the Agenda. The leaders at least managed to dodge a bullet in that the Greek electorate narrowly elected a pro-bailout party (New Democracy) to form the next government. Had Syriza emerged victorious, then the prospect of Greece being forced to leave the Euro – for political rather than economic reasons – would have been highly likely.
As is seemingly usual for these events, no hard and fast plans have emerged which will bring the Eurozone crisis to an end; avoid the sovereign debt problem from leaving European shores for pastures new; or kick-start the global economy and generate significant employment. However, we have had a very nice line in supportive rhetoric. Speaking at the end of the meeting, President Obama provided just such a fluffy assurance: “What I have heard from European leaders during these discussions, they understand the stakes, they understand why it's important for them to take bold and decisive action and I am confident they can meet those tests." Well that’s alright then. Nice to know that our leaders are on the ball like that and do understand a crisis which is hurting many ordinary people around the globe.
The problem lies not with the convictions of our political elite that everything will be alright in the end; and that more than two years down the line, European leaders have finally got a handle on how big a deal this really is. The problem lies with restoring confidence to the markets such that investors believe they have a good chance of making money rather than losing it. Clear, decisive and logical steps must be taken, backed up with political resolve, which will convince global capital that the time is right to come back to the markets, pick up some bargains and invest in future prosperity. Markets have been precious little impressed by more than two years of rhetoric on the sovereign debt crisis – now is the time for concrete action.