Opinion

Ian Bremmer

It’s Groundhog Day for saving the euro zone

Ian Bremmer
May 29, 2012 21:00 UTC

It’s almost June. So why is the euro zone story just about the same as it was in January? It’s a little like the movie Groundhog Day – every day seems to be a repeat of the last, and the story remains the same. But remember: That movie ended. And every day wasn’t the same. Bill Murray made incremental changes – painful ones – until he figured his way out. That’s what the euro zone is doing right now.

Despite all of the elections, the pain, the protests and the German Sturm und Drang, the fundamental basis of the crisis, and the situation, remains the same. Yet this isn’t as bad as it sounds. The actors in the euro zone are very much playing the long game. They’re using the markets both to punish deviations from the outcome they see as the best possible one and to engineer that outcome and help them shape the policies they think will end the crisis for good.

Despite the protests, the overall commitment to the euro zone remains as strong among all of the key players – Berlin and the peripheries – as it was before. That’s hugely important, reflecting that the overall tenor of the conversation has not shifted toward the disintegration of the euro zone, or any individual exits. Indeed, after the long, dragged-out process that’s happened in the markets these last months, the Germans are finally showing the willingness to compromise that we have long expected. They are very gradually moving toward the idea of the ECB increasing the money supply, accepting some inflation, softening the fiscal compact in the zone – moving forward on a whole host of issues, in fact. But with all that movement, they aren’t giving up on the fundamental premise of keeping the euro zone fiscally stable over the long term and recommitting every member nation to budgetary responsibility. That’s why it’s taken so long to get from there to here.

Indeed, Angela Merkel is not just talking austerity, she’s talking growth. The whole continent is obviously happy to hear it, but she really hasn’t changed her message that the zone must spend within its means – she’s simply layered the growth message on top of it.

In short, it looks like the euro zone continues to be on the right path. It’s a rocky path, fraught with challenges, and it may not be a particularly fun one, but let’s not forget the size of the hole that the euro zone nations dug for themselves – trillions in unfunded liabilities, if things were to continue on the gilded path of the late 1990s and 2000s. No matter what, this was never going to be an easy fix.

An unstable world doesn’t necessarily mean a declining America

Ian Bremmer
May 9, 2012 20:15 UTC

Who says America is in decline?

Not me. But, if you listened to a recent Rush Limbaugh show, you might’ve heard him dismiss my new book, Every Nation for Itself, as a “declinist” tract that says America’s time as leader of the world is “over.” Nothing could be further from the truth. There’s an inordinate amount of concern out there that writers who are trying to understand the seismic shifts the world has undergone in recent years are in fact doomsayers – wonks who are convinced the U.S. is no longer a superpower and has lost its swagger. On the other side of this false dichotomy is the camp that tries to pretend all the upheaval of recent years has changed absolutely nothing about America’s objective standing on the world stage.

The split is playing out right now, in fact, in the presidential campaign, with the GOP accusing President Obama of being a declinist, while Obama counters that he is merely being a realist and that the Romney camp doesn’t understand the complexities of foreign affairs in the world today. Here’s the thing – not only is that irrelevant, but the very way the debate is being framed for the public is misleading, at best.

Here’s a simple way to think of it: If you’re camping and suddenly find yourself being chased by a bear in the woods, you really don’t need to outrun the bear – you need to outrun the other guys who are in the woods with you. And so far, the U.S. is doing a fine job staying ahead of the pack.

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