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Europe Lays an Egg - by Stephen Lendman
Europe's deepening financial/economic crisis.
Like earlier summits, they met. They talked. They agreed to talk more and solved nothing. Once again Europe laid an egg.
In fact, in 2011 alone, EU leaders held 19 emergency meetings/summits, proposed dozens of rescue packages, made as many promises, yet are back at square one.
It reminded some of Variety's October 30, 1929 post-market crash headline: "Wall Street Lays an Egg."
After the latest Brussels summit, business publications hinted at systemic failure. On December 12, a Bloomberg editorial headlined, "Europe's Fiscal Pact May Solve Next Crisis, Not This One," saying:
Summit leaders "asked the wrong questions - then failed to answer even those." Moreover, whatever they agree on won't stick. It didn't before and won't now.
"In concentrating on long-term fiscal issues, the leaders mostly ignored the crisis around them." Putting off for later what's needed now never works. The summit made only one thing clear. EU leaders can't shoot straight. Moreover, they're aiming at the wrong targets.
On December 11, Britain's Financial Times also highlighted failure in an editorial headlined, "Europe fails to reach summit," saying:
"It should have been the climax to Europe's thriller." Instead, it "was entirely predictable in its inconclusiveness." As a result, problems remain unresolved."Most importantly, if the current crisis was sparked by the link between sovereign and bank risk, does it make sense to intensify that link?" Saving the euro "amounts to little more than sleight of hand (strategy) in a crisis where clarity and resolve would do much more to restore confidence."
In fact, no "grand plan" emerged. Instead, talks ended by kicking the can down the road without resolution. At best, only more time was bought, but how much is uncertain, given a festering crisis getting worse, not better.
Summit leaders only announced what already exists - the Growth & Stability Pact. It's been around since monetary union. Claiming it'll now be enforced repeats past failed promises. Its mandate from inception was repeatedly violated and will again be now.
In fact, in 2003, Germany and France missed fiscal targets. No penalties were imposed. According to Center for European Research chief economist Simon Tilford, Brussels produced "little more than a stability pact with lipstick."
It did nothing to address Eurozone banks having to refinance 750 billion euros in 2012, one-third of it in Q I. Their deleveraging problem also faces overwhelming challenges without additional capital. Radical austerity won't help. Nor will failure to address growth strategies to revive sick economies.
