A Lack of Leadership in the U.S. and Europe

The deadline for the Democrats and Republicans to reach an agreement for the public deficit in the United States passed, with the “super committee” unable to present a solution. Thanksgiving arrived, President Obama pardoned a turkey, and everyone thanked God for continuing to be the strongest economic world power. However, the problems are still there and, sooner or later, they are going to emerge in force once again while the risk of a second recession remains.

The “economism” experts agree in emphasizing the lack of leadership in both the United States and Europe. The only difference is that in the United States, an agreement is only needed between two sides, while in the European Union it has to be negotiated country by country, as there is not a truly unified governing body. These are some of the opinions of the week.

José Luis Martinez: Over time we will come to the conclusion that the only country to deserve a triple A rating is Germany. And we will see. In the United States, it is striking that the two main parties are incapable of coming to an agreement on something as vital as setting the budget adjustment in the midterm. In the E.U. it is reiterated that the European public finances situation is much better than in the U.S. It remains to be seen whether we can assess European finances as a whole. In the United States, there is the dollar and they have the Federal Reserve Bank, which has protected the country from the spread of the European debt crisis with its pragmatism in the implementation of political currency.

Santiago Carbó: The maneuverability of the American economic policy is stuck in a political tug-of-war that does not allow any steps forward or backward. The reduction of the deficit is not a joke, with the reduction or without it, the possibility of the U.S. entering a strong deceleration or even a recession in 2012 cannot be ruled out. The ball seems to be in the court of the monetary authorities, although Bernanke made it clear that the central banks cannot always save the fiscal policies by supplementing them.

Joaquín de la Herrán: In the United States, Republican radicalism is pushing the response to the limit, encountering distant obstacles in the economy and within the core of a pure political dispute which is already thinking of a long pre-electoral period at the end of 2012. Similarly, Obama is not helping to find a middle ground for the agreement. The Western Economies must act in a much more coordinated way at this point. The lack of trust in investors and financial markets is the fundamental problem, and recovering this trust is the main objective. The attitude of the leaders on both sides of the Atlantic is prohibiting the accomplishment of this objective.

Pablo Fernández: The deficit of political leadership in Europe and in the U.S. has become a real “systemic risk” by failing to implement the necessary measures to put public finances in order. The difference is that in the U.S. those who need to come to an agreement are the two main parties, while in Europe, a start must be made by aligning the member states, who often have conflicting interests, in a balancing act that has shown the difficulty of governance and even the application of measures previously agreed on.