When PIIGS Fly…

We learned last week that air travel could be disrupted by volcanoes, as the Eyjafjallajkull volcano erupted in Iceland and brought European air traffic to a halt. Thousands were stranded on both sides of the Atlantic. As we gradually work our way back to a normal schedule, we are learning that one of Iceland’s other volcanoes, Katla, is overdue for an eruption. “Every time Eyjafjallajkull has erupted in the past 1,000 years, Katla has followed soon after.” (Financial Times: April 23, 2010)

While Europe was grounded, we also learned that the Eurozone PIIGS (Portugal, Ireland, Italy, Greece and Spain) were running out of runway. Greece finally came to the conclusion that it could not sell bonds on its own and Prime Minister Papandreou turned to the European monetary union and the IMF for the bailout that was agreed to two weeks ago in Brussels. This will remove short-term pressures on Greece and the Euro, but it remains to be seen if in the long term there will need to be a rescheduling of the debt. (New York Times: April 24, 2010) Pressure will remain on the other members of this august group to take control of their deficits. While Iceland is not a member of the European Union, it certainly qualifies as a third “I” in PIIGS based on its 2008 banking crisis, which left the economy in ruins and the country insolvent. This small island nation of 320,000 residents has had a major impact on our lives over the past two years.

For the next two weeks the world’s attention will turn to the upcoming parliamentary elections in the United Kingdom on May 6th. Will either the Labour Party or the Tories be able to form a government without an alliance with the smaller Liberal Democrats, led by Nick Clegg? With American-style TV debates being used for the first time, Clegg clearly improved his party’s standing with his performance in the first debate. In the second debate, both Clegg and David Cameron performed well, according to polls taken immediately following the debate, with Gordon Brown trailing both of them. The final debate will take place on Thursday and will focus on the economy, and could make the difference in this hotly contested race. If the Tories hope to return to power they must get a solid lead and avoid a hung parliament that could result in a deal between Labour and the Liberal Democrats to keep the Tories out of power. (Financial Times: April 22, 2010)

Is anyone covering this election writing the British equivalent of Game Change by Heilemann & Haperin?