“The world cannot afford a lost decade in Europe.” With these harsh words, the US Treasury Secretary, Jack Lew, launches an act that accuses the economic policies adopted by European Union in recent years, deemed insufficient to bring out the continent’s syndrome of Japanese stagnation combined with deflation.
In a speech on the eve of the Summit of Heads of State and Government of the G-20, held in Brisbane (Australia) during the weekend, the leading representative of Obama administration does not hide all his frustration for the situation in which the euro area finds itself. “The political status quo in Europe – he said during a speech at the World Affairs Council in Seattle – did not reach the common goal of the G-20 strength growth, sustainable and balanced. The ECB has taken decisive action to support the economy with accommodative policie”. But that alone was not enough to restore healthy growth. “A resolute action by national and European authorities is needed to reduce the risk that the region suffers a real collapse. The world cannot afford a lost decade in Europe.”
Behind these phrases there is all of the American dissatisfaction for the failure on the part of European governments, in particular Germany, in the expansionary fiscal policies. Barack Obama and Angela Merkel Will speak of this on Saturday and Sunday in Australia, in tones that are expected to be fiery.
“The world,” accused Lew, “counts on American economy to drive the global recovery. But the global economy cannot thrive only counting on the fact that the United States are importers of first and last resort, nor can hope that our growth is enough to offset the weak growth in other major world economies.”
The relative strength of the US compared to competitors is having an impact on exchange rates, with the dollar rising against euro and the main currencies of emerging markets. Even this is not like the US government, which fears a slowdown in exports. Even the fall of oil prices in perspective can create problems to the flourishing industry of shale oil.
The recipe suggested by Lew is a mix of monetary, fiscal and structural reforms to make economies more competitive. In this regard, the American minister noted how even Japan has slowed efforts to change. Of three arrows of Abe (monetary, fiscal and reform) “the first two,” said Lew “have contributed to stronger growth in 2013, but this year, the Government has moved back on the fiscal front and the third arrow has not been implemented fully.”
No explicit reference to was made Germany, but it is known that the policy of the Government headed by Merkel, with zero external debt and a large trade surplus with the foreign countries, does not satisfy Washington. The timid plan of 10 billion euro public investment announced by Minister Schaeuble from 2016 is obviously too little for the US.