Getting over excited

As Peter Oborne observed on Newsnight recently, there is a tendency in the Eurozone to think its problems are political, rather than an economic crisis that cannot be wished away. For example, the Bundestag’s much vaunted approval of an expanded EFSF has done little to alleviate Europe’s weakness. Here’s why:

1) We all knew the vote would pass: the opposition support made sure of that. The key point was that Angela Merkel got an absolute majority. It was a close call, but it always seemed likely that she would gain enough support from the flailing junior coalition party, the FDP, which, given its collapsing poll results, was unlikely to threaten the stability of the coalition for fear of further falls.

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2) Remember what was actually approved. A whole host of analysts and observers have not mentioned that the EFSF is now nearly where it was supposed to be when it was agreed in May 2010.