Economy
5:34 am
Sat November 24, 2012

How Steep The Fiscal Cliff Looks From Europe

Originally published on Sat November 24, 2012 9:30 am

Transcript

SCOTT SIMON, HOST:

This is WEEKEND EDITION from NPR News. I'm Scott Simon. Much of our political oxygen is taken up with fiscal cliff negotiation and speculation in the United States as people try to figure out whether we will indeed go hurtling over into recession or inch back from the edge of the cliff. Since all our economies are linked in a global network these days, we thought we'd get the view of all of this from elsewhere.

Now tomorrow, my colleague Rachel Martin will get the view from the Middle East. This morning, we're joined by Joshua Chaffin, who's the Financial Times man in Brussels. He joins us from the BBC studios there in Brussels. Thanks very much for being with us.

JOSHUA CHAFFIN: Thanks for having me.

SIMON: First off, is there a phrase in French or German or the Maltese language for fiscal cliff?

CHAFFIN: Well, in French, you'll have to excuse my accent is the precipice bougetere (ph). In Spanish, it would be the abismo fiscal. In German, interesting enough, I quizzed a number of Germans and none of them could quite come up with the proper phrase for it, but they were certainly aware of it.

SIMON: Speaking of Germany's reaction, an article in Der Spiegel this month in which the headline referred to America's fiscal cliff as, quote, "the next Greek tragedy." Is that how it's seen there? Is there, in fact, if I may, some collegial satisfaction that European's might take in America's problems?

CHAFFIN: I suppose it's a complicated answer. I think in Germany there definitely is a strain of this kind of thinking. You have to realize that throughout the crisis, Europeans have had Americans constantly sort of lecturing them about mismanaging their economy and the need to get to grips with this debt crisis. President Obama has called Chancellor Merkel repeatedly. Timothy Geithner has been over here to have meetings with finance ministers and pleading with them to kind of get their house in order.

It's an incredibly sore spot here and so I think the sense that you can sort of point back across the Atlantic and say, look at these guys, they're actually not terribly organized either is satisfying. And I think it even goes back deeper because there is a belief in much of the continent that this whole crisis originated in the U.S. with the Lehman Brothers collapse and the toxic securities that originated in Wall Street. So it's sort of of a piece with that, if you will.

SIMON: And so Europeans might be little more eager to understand the connection between the U.S. economy and the European economy than sometimes we Americans have understood?

CHAFFIN: I think that they understand it pretty keenly. I think Spain is one example, and I think the reason is that Spain is now the front line in the Euro crisis an so Spaniards seem to have realized that now the U.S. and the fiscal cliff is actually the next thing that could sort of push them even deeper into the crisis. So they're kind of looking at it in very practical terms and I think they're concerned that it's not dealt with.

SIMON: Even in the political campaign just passed in this country, a lot of Americans think they can draw lessons from Europe's financial crisis, although they're rarely the same lessons. Are there lessons that Europeans think they can draw from events in the U.S.?

CHAFFIN: Germans clearly are very much in the camp against debts and deficits and so forth, but Europe has a kind of equal argument, I think, for the U.S. audience, which is the merits of stimulus and spending to revive the economy. So there's a lot of realization here, I think, in the last few months that only relying on austerity has actually made the debt problem worse because the economies have fallen into recession and that has made the debts bigger and the ability to pay them less.

I think in the U.S. campaign the Republicans mostly adopted Greece as their argument, but I think here it's certainly argued very much the other way, and I think the election of Francois Hollande in France and I think the rise of some of the other more center left-leaders have kind of tilted the debate against Germany here in the last few months, or at least rebalanced it.

SIMON: Joshua Chaffin of the Financial Times speaking with us from the BBC studios in Brussels. Thanks so much for being with us.

CHAFFIN: Thank you. Transcript provided by NPR, Copyright NPR.

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