This is an interesting little signal of how politics really works over here. A minor Dutch politician told everyone the truth about Europe’s banks and banking systems and immediately European bank stocks dropped by 4%. This showing quite how it really is all a game of confidence at present, all just smoke and mirrors.
As Felix Salmon points out, it isn’t that what was said was wrong. Quite the opposite in fact: the difficulty was that what was said was absolutely correct and true:
If a gaffe is what happens when a politician accidentally tells the truth, what’s the word for when a politician deliberately tells the truth? Dutch finance minister Jeroen Dijsselbloem, the current head of the Eurogroup, held a formal, on-the-record joint interview with Reuters and the FT today, saying that the messy and chaotic Cyprus solution is a model for future bailouts.Those comments are now being walked back, because it’s generally not a good idea for high-ranking policymakers to say the kind of things which could precipitate bank runs across much of the Eurozone. But that doesn’t mean Dijsselbloem’s initial comments weren’t true; indeed, it’s notable that no one’s denying them outright.Dijsselbloem’s interview can be summed up simply: we’re not bailing out banks any more. Instead, we’re going to let them fail.