John Saunders is a Professor of Marketing at Kent Business School, the University of Kent and makes the following expert comment:
The Euro area, or “Have you seen the little piggies rolling in the dirt?”
The Beatles, 1968
From the start the PIGS were the problem: Portugal, Ireland, Greece and Spain. Originally it was a little unfair on Spain, who did not receive a bailout, but now Spain has a just place in that ugly acronym. With Italy and Cyprus lining up for the next bail out even the acronym starts to wilt, or maybe not. PIG SIC is a good description of the Euro economy.
Politicians, economists and bankers take the flack for pig sick state of the world economy. As a marketer it is a pleasant change not to be accused of causing the world’s ills. But hands up, as Thomas J Watson, the founder of IBM proclaimed: “Nothing Happens Until Someone Sells Something.” In this case, firstly the selling of mortgages and property to the greedy or poor in the US, The UK Ireland and Spain, and then selling bundles of that debt to bankers who should have known better.
Having helped get the world into this mess, how can marketers help us climb out of the hole? Easy, the world’s financial imbalance is all about marketing and demarketing. Inevitably the world is in balance but there is one lot of people want to spend more than they have and another lot want to spend less than they have. Amazingly this is also true of the Euro area, since the total imports and exports to the rest of the world are in balance. Unfortunately, within the Euro area there is one load of people – the Germans – want to spend less than they have, and another load – the PIG SIC, who want to spend more than they have.
In contrast to the Euro area, Japan is a neat self-contained case where consumers save a lot and lends it a negative interest rate to the Japanese government who likes to spend a lot. The Japanese imbalance has trashed the Japanese economy for twenty years but at least their mess is their mess. It is odd that the Japanese do not want to buy the Sonys, Hondas and Toyota that the rest of the world borrows money to buy.
At least Japan is sitting in their mess. Not so the English Speaking peoples who borrowed trillions of Yuan from China for people to buy houses and other nice stuff they could not afford, and for governments spent money they did not have. In many ways it is just like Japan where the locals want to save rather than buy the cheap stuff that the rest of the world craves for. Now there is a beautifully symmetrical slugging match between America accusing China of keeping the Renminbi too low and China accusing America of using quantitative easing to reduce the dollars value and so reduce the value China’s loans to America.
Meanwhile, in a rare case of reticence, little Britain keeps quiet and it retains its AAA rating while printing money and letting America take the flack. If only Britain would be shy more often!
The symmetry of blame is an enjoyable feature of the Sino-American relationship. Not so the euro. Hear the bad guys are those on Europe’s periphery who spent too much and borrowed cheap Euros to do so. In this case its Germany making those lovely Mercedes and Mieles that the world craves for. Meanwhile Germans consumers save. So hang your heads you sinful spendthrifts SIC PIGs.
But is it those that over spend that are in the wrong? In answering this question the ancient world and all the whole world sing in perfect harmony: Aquinas, Aristotle, Cato, Cicero, Gautama Buddha, the Hebrew Bible, Muhammad, Moses, Philo, Plato and Seneca. It is usury, not borrowing, that is wrong. It is the charging of interest on a loan that is condemned. So in Europe we have symmetry of the popular condemnation of the SIC PIGs versus the whole of religious and thinking.
So there is maybe some justice in the economics joke:
A Portuguese, Irishman, a Greek and a Spaniard go into a bar.
Question: Who pays?
Answer: The German.
So what can marketers do? Well, to start with, help companies make stuff that Chinese, German and Japanese people want to buy. At the same time create financial products that makes the spendthrifts want to save. Or demarket savings to the inveterate savers and demarket products to the inveterate spenders.