EU Agrees to Disagree on Debt Crisis until 2013 Whilst Greece Smoldwers in Riots and Firebombs
By: Mike Shedlock
Dec 16, 2010
Pretty speeches regarding solidarity will not solve the European debt crisis. Yet, as Greece smolders in riots and firebombs over various austerity measures, pretty speeches, untenable pledges regarding haircuts, and continual bickering remain the only action items of note coming from Europe.
Greece is not the only thing smoldering right now. Eurozone politics is on the front burner, with the heat on high. Please consider Europe Staggers as Critical Summit Looms
Europe’s smoldering financial crisis flared up on Wednesday, with riots over austerity spending in Greece, new signs of troubles in Spain and little indication that European leaders were moving any closer to agreement on a systemic approach to long-term stability.
In remarks to the German Parliament on Wednesday, Germany’s chancellor, Angela Merkel, tried to reassure the markets and answer some of her own critics by allaying fears about the future of the 16-nation monetary union.
“No one in Europe will be left alone, no one in Europe will be abandoned,” Mrs. Merkel said, offering an olive branch to her European partners, some of whom have questioned her commitment to the union. “Europe succeeds when it acts together and, I would add, Europe succeeds only when it acts together.”
Mrs. Merkel’s soothing words were undercut, for example, by her adamant rejection of euro bonds, European-wide bonds that would provide a way for the euro zone to pool its debt and risk, allowing weaker members to borrow at lower rates.
With Irish elections scheduled for early next year, investors worried that the opposition’s threatened move could soon become reality.
“Those who think we can unilaterally renege on senior bondholders against the wishes of the E.C.B. are living in fantasy land,” said Ireland’s finance minister, Brian Lenihan, referring to the European Central Bank.
In Greece, in a reminder of the social and political costs of extended austerity programs, Athens was hit with its seventh general strike this year, grounding flights, keeping ferries in ports, halting trains and closing government offices and schools.
Opposition to the measures, and to the pressure being applied by international creditors, was clear in the streets on Wednesday. Angry protesters wielded placards reading “I.M.F. out!” and “Let us not live as slaves!” while others chanted “Thieves, thieves!” and “Shame on you!” to unseen deputies in Parliament.
Recently, Merkel has been criticized for opposing an increase in the size of the nearly $1 trillion bailout fund operated by the European Union and the International Monetary Fund and for dismissing the euro-bond plan.
“Germany’s thinking was a bit simplistic on this,” said Jean-Claude Juncker, prime minister of Luxembourg and chairman of the group of euro-zone finance ministers, in a blistering attack last week in the German newspaper Die Zeit. “They are rejecting an idea before studying it.
In her remarks to Parliament on Wednesday, Mrs. Merkel tried to redefine the narrative of events shaking the union: “It is undeniable,” she said, “that some euro-zone countries face difficult challenges. But it is also undeniable that the euro has shown itself to be crisis-proof.”
Untenable Pledges Regarding Haircuts and a “Crisis-Proof” Euro