Published on the Malta Today¸ issue 13th August 2011
This summer has started well with the news of the capture of a long time fugitive from US justice . US marines raided a well guarded compound in Pakistan which led to the capture and death of Osama Bin Laden -Al Qaeda Numero Uno. Alas ¸no more good news followed on the international scene. The partisan squabbles in US congress which led to an eleventh hour compromise to sign a pact to raise the national debt limit has revealed how precariously balanced is the dollar currency. This uncertainty has weakened market confidence and saw billions being lost on international stock exchanges. Crude oil prices gone down to below November 2010 levels while gold reached new highs and Dow Jones plummets a massive 600 point.Paradoxically the sudden downgrading of US currency from AAA to AA+¸ was not a hot topic on domestic media.
It is amazing how no illuminati within the business section of TOM have argued the possible negative consequences on the European markets or covered in a Lou Bondi TV discussion programme. But any cursory look in the foreign press will indicate that something serious is happening with the Dow Jones having suffered the highest drop since the Lehman incident in 2008. Brussels was agog with leaders of the EU in an emergence summit on 21 st July which regrettably failed to inspire confidence on the international markets. The lack of a decisive consensus to apply surgery ( not palliatives ) to the fragile Euro currency led to unprecedented negative sentiment in the markets.
Our neighbour Italy¸ which we were told that it’s economy is solid and secure by its minister of finance is was now facing a looming crisis and Sig Berlusconi is urging a kamikaze austerity programme with a euro 48 billion price tag. Whether he delivers or not is another question. Unquestionably ¸all this bad news on the economic front has jinxed any political leader who longed for a quiet rest on the Rivera. Most of European leaders are known to have postponed or cancelled their holidays this season .
Incidentally our prime minister is reported to reveal exclusively to the ubiquitous The Times of Malta ( possibly via their anointed delegate in Brussels ) that the current instability in the currencies ( dollar and euro ) and financial turmoil is not just about fundamentals but also about the markets’ confidence .He stressed that this reflects the capacity and ability of governments to address them. What a consolation and with a sigh of great relief that Malta can boast of stellar growth and many initiatives that are leading it to higher tourism and better job opportunities.
But complacency is not welcome according to the said prime minister. As if he knows more than can be gleaned from reading official statistics the prime minister cautions us all to be vigilant. He coyly admits to the Times Of Malta (TOM) that quote “ If uncertainty continues over a sustained period of time¸ the wider European economy is bound to get hit negatively. Indeed¸ there are strong indications that this is already happening.” Evidently party apologists inflate our domestic pride that we have bucked the trend of recession and avoided austerity .Others think this is balanced on a knife edge. The Times of Malta is surreptitiously informed by PM that painful decisions are still to be taken to enact urgent structural reforms ( forgetting the claw back of a clandestine euro 500 per week salary increase to all ministers )