The Eurozone crisis so far has resembled one of those cheesy fight scenes in a certain type of Hollywood movie. The hero is hugely outnumbered but each opponent patiently stands around looking menacing waiting to be ‘sorted out’ in turn.
Likewise Eurozone bailout candidates have lined up individually
to face the Troika by rota and once ‘saved’ the ‘rescuers’ have
sought to sing a little aria akin to the end of a Mozart opera
noting how good has vanquished evil and all will be well in the
world henceforth...Usually after an expensive meal in Brussels also
paid for by EU taxpayers.
So, stage one of bailout mania was a process of Eurocrises in
linear order, with nations bailed out to save their economies or
indeed somebody else’s bankers...
The recent Cyprus process marked a watershed. It was a bail...well
‘bail-what’ one might ask? Cyprus marked a sort of hokey cokey
dance of a ‘bail-’ process; altogether now: ‘you take one bail-in,
you take one bail-out...you do the hokey cokey and turn around and
that’s what bankruptcy’s all about!’ Cyprus endured a bizarre
bailout farrago which damaged the trust implicit in previous EU
statements of safety for savers.
The Eurocrisis has reached a new stage. Things have gone
multilateral. First up are the existing bailouts. A progress report
suggests all may not be quite on the road to recovery that has been
previously reported by the EU. Greece festers in depression while
Cyprus is a tinderbox of resentment to put it mildly. In Ireland,
they want debt relief. Meanwhile in Portugal post court
intervention, the government must immediately find an additional
1.3 billion Euros in cuts or face the consequences. Having already
cut some 13 billion from the budget, this is, to put it mildly, a
problem.
With Portugal on a precipice, the Mediterranean 500 lb gorilla
nations do not look much better. In Spain the government have a
massive majority but, like France, barely seem to grasp they are
supposed to lead. As befits the land of Machiavelli, Italy has
bypassed the leadership problem completely by failing to form a
government at all.
At least we can sigh relief about stability when it comes to
Germany as... No, hold on a moment. There is a mild-mannered
Professor in Hamburg who is no populist but he is apparently very,
very popular. Step forward Professor Bernd Lucke, an economics
scholar who has created the “Alternative for Deutschland” Party
which is not merely anti-Euro but coolly coherent in its
well-considered plans to engineer Euro-euthanasia, end the bailout
death spiral and reduce simmering north-south tensions. Is the
party just a protest flash in the pan? With some polls indicating
their support might be a giddy 25%, the simple metric is that they
must hold above 5% by the autumn elections to enter the German
Parliament. This milestone alone ought to sufficiently splinter the
vote to unseat Mrs Merkel...
True, the Latvians do seem intent on upgrading their currency peg
to Euro membership but quite how you square an additional 2.5
million Euro users with rejuvenating a 17 nation currency zone of
317 million people is a challenge even with a dose of that
crazy leverage which got us here in the first place...
The fact that there is barely space here to elucidate on the
growing vote for the True Finns or various other Eurosceptic
parties, never mind Slovakia, or the jump in Slovenian government
bond rates in recent weeks, only emphasizes the multilateral
problems facing the Eurozone. Until recently, EU ‘leaders’ were
smugly confident they could alleviate each dropping shoe in turn
and hence hold the Euro together. However the wounds are turning
septic for several recipients of bailouts and increasingly the
Eurozone looks to be held together with a mix of duct-tape and
bandages. Elephant sized problems lurk in every room where the Euro
is present. The Eurozone probably won’t collapse due to one massive
calamitous event. Rather, the single currency, having been built on
sand, is increasingly likely to be subject to that slow slicing
terror of death by a thousand cuts...
The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of RT.
The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of RT.