Eurocrash: confused waters

29/08/2012

Where strong currents meet, the result – as any mariner will tell you – is often confused waters, a phenomenon especially prevalent when the tide is on the turn.

And, although it is early days yet, I am beginning to sense a turning point. This is no more than a hint, but there is a new mood of determination and direction abroad. At last, the "colleagues" have a plan B, they know what they want to do. Over the next few months, they will roll it out, for it then to culminate in the grand announcement of the EU treaty convention at the December Council.

Highly apposite in the context is the Financial Times Deutschland which is pointing to a growth in competitiveness in the eurozone, and a highly optimistic piece about Italy in FAZ declaring that "the end of the crisis is in sight".

With a general election in the spring of 2013, Monti – currently in Berlin for talks with Merkel – is confident of returning to office, a confidence he will share with the German chancellor. According to the latest poll, the CDU/CSU gets a 39 percent share of the vote, up three points on the previous week and the best showing since July 2008.

Together with the FDP, the Union is on 44 percent, six points ahead of the SPD and the Greens. Even though the news from Spain is dire, with massive capital flight being reported, attended by strong rumours of a bailout, this must strengthen Merkel's hand.

The chancellor is further helped by her party closing ranks after Dobrindt's outburst at the weekend. We have CSU chairman Horst Seehofer reaffirming support for her "successful policy of euro stabilisation".

That the "colleagues" feel themselves on the up is not news that most will want to hear, but the danger is ever-present. The much-heralded collapse of the euro is always a possibility, but this always was a high-stake game, reliant on the beneficial crisis to deliver results.