Thursday, December 15, 2011

Another Deal Undone?

The euro is falling, Italian borrowing rates are rising, and Jens Weidmann is still resisting, but the latest euro-saving deal seems to be coming unstuck even faster than the previous ones.
Meanwhile, at least four more European Union members — none of them using the euro — have expressed reservations about the agreement, which only Britain definitively opposed at the summit meeting. Some leaders said in Brussels that they wanted to consult their parliaments. Hungary, Sweden, Denmark and the Czech Republic now say they want to see the text of the proposed treaty, which is meant to enforce strict limits both on members’ annual budget deficits and on their cumulative debts, before fully committing themselves. France and Germany hope to have a draft of the treaty approved by the end of March and ratified by the end of 2012.
The fiscal strictures are meant to prevent future crises, but the financial markets appear to be much more focused on whether the euro zone nations will put their money where their mouths are now, when they say they will defend the euro and its members. Beyond the bailout funds already in place, the Brussels agreement calls for member nations’ central banks to provide 200 billion euros ($259 billion) to the I.M.F. to create a bigger “firewall” of money that would help protect heavily indebted euro zone states from speculative pressure.

And here is Médiapart:
Or quelques jours ont suffi pour montrer que le texte bouclé à Bruxelles n'est qu'une dangereuse supercherie.

Cet accord de principe n'a d'abord que peu de chances d'être traduit dans les formes juridiques d'un « traité intergouvernemental » d'ici mars 2012, comme le veut Nicolas Sarkozy. Il a encore moins de chances d'être ratifié dans les 26 pays membres de l'UE concernés. Il n'en a aucune d'être appliqué « à l'été 2012 », comme le souhaite le chef de l'Etat.
Told you so.

1 comment:

Merlin said...

Well, everybody knows that as Francois Hollande and Jacques Chirac's mentor once said: "Il n'y a aucun probleme qui ne resiste a une absence de solution."

The current crisis will go away, it will take a long time, 5 may be 10 years, a mix of austerity and animal spirit will do. In the meantime it has to be stage managed.

This crisis, as far as France is concerned, has been 35 years in the making, when people did believe that lunches were free, you could work 35 hours paid 40, retire early on the same pension as if you had retired at 65, or laughed out loud when some presidential candidate thought that you should "travailler plus pour gagner plus", etc.

Thinking that all these years of youthful insouciance and belief in the good fairy would be erased after a couple of quarters is just optimistic.

A whole business model, has to be rebuilt. French have to make a fundamental choice:
rat race or pauperism and pride in their past. There is nothing wrong being poor, if that's what they want.