We are getting more analyses of the EU summit meeting last Thursday and Friday, and it appears that the measures adopted–the decision to lend money directly to stricken banks and not just to the governments of those banks and the decision to begin thinking about some variation of eurobonds–signal the strength of the anti-austerity forces. The Greek elections and the powerful victory of the the Socialists in France weakened the ability of Germany to maintain its hard line against both policies. How this will affect Chancellor Merkel in German domestic politics remains to be seen. The successes of the anti-austerity politicians, however, remain unknowable: all the new policies require money and it is not clear from where the money will come.
Mexico will hold its presidential election on Sunday and it appears as if the candidate from the Institutional Revolutionary Party (PRI) will win. Enrique Peña Nieto is a very charismatic leader, but has hardly distinguished himself in his political career. The other two candidates have failed to capture the imagination of the public. Mexico obviously suffers from the violence of the drug wars, but as long as the US remains such a lucrative market it is hard to see how Mexico could reasonably suppress that violence. In other respects, the Mexican economy is doing well and that stability could explain the lackluster political campaign.
The Economist has published an interesting essay on the wealth of China’s leaders. It seems as if the Chinese have learned some of the wrong lessons from the American political economy. Wealth and power often go together, but they always make bad public policy.
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