Nothing was accomplished at the euro summit except that they will have summits more often. They did agree they need an agreement about their common fiscal issues and they moved up the date for getting the European stability mechanism funded even though there is no foreseeable way to get it funded. They will take another look at the european fiancial stability facility’s financing, even though that has no way of being financed further.
Oh, oh, I almost forgot, they want European Central Banks to make bilateral loans up to 200 million euros to the IMF so the IMF can back the European Central Banks. Now, that’s ironic.
The one thing they could agree on was that they need more money and they will meet to figure out where they will get more money.
Okay, so there you have it, a whole lot of nothing, but they do definitely plan on spending every last dime they have and that the U.S. will give them. I’m not looking down on them because we will be in their position soon.
I am amazed when people say capitalism has failed. Nothing about this is free market capitalism. This is cronyism and a Socialist, entitlement culture with wasteful spending and taxation thrown in the mix.
England’s out of any deal and that puts an end to the Eu’s efforts at forming a new treaty. British PM Cameron obviously didn’t think that saving the euro was worth the cost. Cameron said the deal exposed London’s financial services industry to unwelcome EU regulation. He has a good point.
Does anyone really believe that these sovereign nations are going to subject themselves to yet another bureaucracy even greater than the ones they live under? Someone in Paris is going to tell the Greeks they have to cut back on this or that or be taxed more? I think not.
They didn’t come up with a unanimous solution that worked for the 27 members of the EU so now they have 17 members to work on a deal. That’s not looking good for the euro from what I can discern, but I didn’t major in finance so maybe I’m missing something.
Meanwhile, German Chancellor, Andrea Merkel, still wants a treaty change, which would never be accepted even if there was time enough to do it. Again, these nations aren’t going to kowtow to another nation’s bureaucrats on fiscal matters to say nothing of the whole taxation without representation that would ensue.
A further complication is the fact that every proposal is vague and undefined. How do leaders give something the okay when they don’t know what they are okaying?
The bailout fund is another bad joke. They might have enough money to handle Greece, but that’s about it. Forget Italy, Spain and whoever else comes along. Since the bailout fund doesn’t have sufficient funds to do much of a bailout, they would need to borrow money from the one entity that can print money, the European Central Bank (ECB), but the President of the ECB, Mario Draghi, said that’s not happening.
The European Stability Mechanism (ESM), a permanent successor to the temporary EFSF, which the EU is going to revisit as per this summit, needs to be able to put out fires. It would need to borrow money and lend them to countries who are in trouble. The European leaders will not allow it to operate as a bank so it won’t have any fire extinguishing power.
The ESM is capped at a €500 billion euros and Italy alone has a total debt of roughly €2 trillion. And then there is Spain, Portugal, Ireland, and the very needy Greece. So much for revisiting that!
Europe’s banks can’t step in because they don’t have the money or the desire. I can’t imagine private investors jumping to invest in this mess. If Corzine were able, he might be willing to invest.
The common currency idea was never serious and was used so the PIIGS (Portugal, Ireland, Italy, Greece, Spain) could float more deficits and buy exports from the Northern Alliance. Interestingly, the Northern Alliance will be more competitive with the pending devaluation of the euro when ECB finally moves, in desperation, to Quantitative Easing .
Britain just tried the QE and it did very little, just as it did very little in the U.S.
The European Central Bank is now buying worthless collateral and the Feds are providing dollar swaps. They started at $3 billion two weeks ago, and last week they were up to $50 billion. Oh yeah, that’s working.
What a hopeless mess.