Editorial: Europe’s Consumer Confidence Up, U.s. Consumers Down

Analysis: Success, compromise, ageing erode Europe’s Greens

“The ECB, EBA and EU are all saying that the AQR and stress tests will be stringent,” said a credit banker at a large London-based investment bank. “It’s easy for those to say that; they don’t have to come up with the money. “It’s the government I want to hear it from. I want to hear from the government what happens if banks fail.” With confidence in European banks still low, the sector is valued at a significant discount to U.S. peers, trading at around par with the book value of its tangible assets compared with around 1.7 times for the United States, according to an analysis by KBW. Europe’s top 42 banks are already about 70 billion euros short of meeting new international capital norms, even before taking into account that they have often set aside too little to cover unpaid loans or an economic slump. “We see a problem primarily in Spain and Italy, because that’s where you have a housing market that’s still in freefall,” said Jon Peace, an analyst with Nomura. “The small banks have bigger problems than the large ones.” OUT ON A LIMB Germany, the euro zone’s strongest economy, which has shouldered much of the burden for country bailouts, does not want a scheme that leaves it on the hook. That aversion is unlikely to change, whatever the outcome of current government coalition talks. Berlin has suggested that a bank resolution agency should only have power over the euro zone’s largest lenders. That would reduce any potential bill to be shared by the 17 euro zone countries, but such a deal could mean that small risky banks, at the heart of the current crisis, slip through the net. The absence of a financial backstop to help banks once their problems are laid bare may prompt the ECB to delay the tests of banks altogether, a move that could postpone supervision and damage the euro zone’s image internationally. The situation would be even worse if haggling between EU governments delays agreement – now penciled in for December – on the ‘resolution’ framework to cope with laggard banks. That would have a knock-on effect on talks to finalize the regime with the European Parliament, potentially leaving the ECB out on a limb when it takes on supervision, as now planned, towards the end of next year. “We will not start before governments have agreed on a backstop – emergency funding for capital holes – which we might find in the balance sheets,” Yves Mersch, the member of the ECB’s executive board in charge of supervision, said on Monday, referring to the bank balance sheet checks.

Europe’s best forget Seve

I think its extremely disappointing that a lot of the guys are not playing, Lawrie said. Its disappointing for everyone involved for the Tour, who have done a great job putting it on; and for Seve and his family. I mean, my God, most of us are out there playing because of what Seve did years ago. I would walk to Paris to play on the team next week. Sad that others dont share Lawries point of view. Many seem to have forgotten what Seve did for the European Tour. His swashbuckling style of play and charisma helped bring sponsors to the table and increased prize money. He helped open doors in the United States by winning the Masters, the first European to do so. Europes elite probably wouldnt currently be earning colossal sums of money if not for Seve. Who were all of the 2013 PGA Tour winners ? Its not even a year since some of the aforementioned Ryder Cup players were invoking Seves spirit at Medinah, as Europe stormed back to win the Cup. Yet those same players who pointed to Seves image on their sleeves wont play in a tournament dedicated to his memory. Yes, its a long season. True, Europes best cant play in every one, but youd have thought more top players would have made an effort to honor Seves memory. Especially when many of them will accept appearance money to turn up to play in pretty meaningless tournaments in far-flung corners of the world. Have they forgotten it was Seve who waged war with the European Tour to make sure he and other top Europeans could be paid appearance money?


The Conference Board (a private research firm that produces another oft-cited index) and a recent survey conducted by CNBC found similar results. In the CNBC poll, 61 percent of Americans expressed a downbeat view on the current state of the economy, a 5-point increase from three months ago. Americans are growing more worried that their personal income won’t keep up with inflation, that higher interest rates will make economic growth sag, and that the Washington budget wars will lead to an economy-battering partial shutdown of the government. Yet in Europe, the skies are clearing. Consumer confidence in the United Kingdom rose to the highest level in six years as real-estate prices bounced back and spending ticked up. Why is this happening? In part, because Europe is emerging from darker times. While the U.S. came out of the Great Recession in 2009, much of Europe suffered through a double-dip recession. Economic crises in Greece, Ireland and other countries threatened to be contagious. That sent confidence reeling in the Old World. Talk about role reversal. For some time, it seemed, U.S. hopes for a robust recovery were being held back by the risk created by the economic failures of Europe. Now it looks like the public perception here is that our problems are homegrown.

Another icon of the movement, Daniel Cohn-Bendit, distanced himself from the party and won’t run again for the European Parliament next year, while the current party leader, Pascal Durand, said he would step down in 2014. The French Greens’ candidate for president, Eva Joly, polled a humiliating 2.3 percent last year, a far cry from the party’s record 16.7 percent score in the 2009 European elections. ALL GREEN NOW To a degree, the Greens have become victims of their own success. We are all green now. Many of the issues they forced onto Europe’s policy agenda – from renewable energy to sustainable development or gay rights – have been embraced by the mainstream parties, at least in part. Fighting climate change, reducing carbon emissions and recycling waste are standard policies for European governments nowadays, albeit pursued with less zeal than the Greens demand. U.S. President Barack Obama and the European Commission both espouse “green growth” as the way to revive industrialized Western economies. Merkel’s center-right government robbed the ecologists of probably their most potent issue when she decided to phase out nuclear power plants in Germany after the Fukushima reactor disaster in Japan in 2011. In France, the Greens lost credibility with many supporters because they failed to make Hollande significantly reduce the country’s dependency on atomic energy. The government plans to shut down just one of 58 reactors in its 5-year term, and even that will take years to dismantle. Likewise, Finland’s Greens have been damaged by staying in a coalition that decided to build new nuclear power stations. Battles against new airports or rail hubs or against the use of hydraulic fracking to search for shale gas have mobilized local support for Green causes, often in alliance with middle-class “not in my back yard” campaigners. But barring another Fukushima nearer to home or the threat of a war involving nuclear weapons, it is hard to see what would prompt a major revival of the Green movement.