It didn’t take all that long. In November 2011, Alexander Stubb, then Finnish Minister for European Affairs and Foreign Trade, added his morsels of wisdom to the Eurozone debt crisis that was blooming into splendid fruition.
“It should be the triple-A countries” – at the time Finland, Germany, France, Austria, the Netherlands, and Luxembourg – “that basically, not dictate the rules, but at least have a strong say, because why would we listen to countries that are not taking care of their own public finances?” he told Reuters.
With a PhD in International Relations from the London School of Economics and Political Science, he knew whereof he spoke.
“For me, the euro is a Darwinist system. It is the survival of the fittest. The markets take care of that, and I think that’s the best way we can keep up market pressure.”
Political pressures and the force of the financial markets would elbow these non-triple-A debt-sinners countries – 11 of them at the time – into cutting their deficits and eventually, someday, their debts, as prescribed by treaty, or they’d force them out of the Eurozone.
Europe’s “real core” is made up of those countries that use the euro and are triple-A rated, he said. They have a better economic management reputation than the rest. So, instead of some political core, “it’s a market driven core.” And those countries that couldn’t make it to a triple-A rating, well, the Eurozone might need to be a lot smaller….
In the summer of 2012, Uncle Draghi’s “whatever it takes” washed over these markets.
In June 2014, Stubb became Prime Minister.
And today, Standard & Poor’s cut Finland’s triple-A rating to AA+, same as many other debt sinners in the Eurozone. Only Germany and Luxembourg remain in that triple-A rated core of Europe that Stubb had so wisely described three years ago.
Finland’s economy will likely shrink in 2014 for the third year in a row, dependent as it is on its disappearing mobile phone industry (Nokia) and the paper industry. And now, the Ukrainian fiasco is causing a lot of unhelpful friction with neighbor Russia. Or as S&P put it:
The downgrade reflects our view of the risk that the Finnish economy could experience protracted stagnation because of its aging population and shrinking workforce, weakening external demand, loss of global market share in the key information technology sector, structural retrenchment of the important forestry sector, and relatively rigid labor market.
Maybe the Troika should impose the same “structural reforms” on Finland that have helped Greece so much?
But Stubb doesn’t need to worry that this vicious downgrade would raise Finland’s cost of borrowing. Just look at Japan. It is in the worst fiscal situation of any still functional country, with the worst deficit (for years, the government has borrowed around 50% of every dime it spends) and the biggest mountain of debt of any country out there, and much, much worse than the worst in the Eurozone, which is Greece.