Last n ight on Newsnight the French Finance Minister gave an accomplished interview. She understood poorly worded questions and spoke well in a foreign language. Her message was perfect spin. She told us all current members of the Euro would remain members. She said there will be no more bail outs. She was sure no country within the zone would have difficulties financing itself in the year ahead. It was a “Crisis, what crisis?” moment, a “Let them eat cake” interview.
The BBC’s Economics correspondent afterwards told us the Euro political classes are in denial about the troubled universe of the bond traders, bankers and business people who have to work with the results of the broken banks and the overborrowed states that stay within the Euro zone. He could have added that the politicians have to keep spinning through whatever the odds. If they once suggested there could be another bond crisis, or another bank shake up, or further deterioration in one of the struggling economies, they would hasten just such an event. Loose talk about reneging on bond obligations and seeking repayment of loans by the ECB to Irish banks was sufficient to cause the last phase of the crisis.
The Euro, just like the Exchange Rate Mechanism before it, forces politicians either to fly in the face of reality or to keep quiet. Markets want to go in the opposite direction to the politicians. In such circumstances careless talk can cause great economic and financial damage. The French Finance Minister had to say what she said. She might have shown greater wisdom by declining to comment at all. A defence few believe is no defence.