Saturday, May 08, 2010
No bail out clause?
A promise to establish a fund that promises to defend the euro. Deft.
Tightening the noose. This only makes the (in my opinion inevitable) implosion of the Euro area that much more dangerous. Imagine all the scenarios for each Euro country member during times of economic stress. Remember, the Euro is only a bit more than a decade old and experienced its first existential crisis.
The euro will likely see a rebound until the final implications are digested. This measure simply buys time.
British officials are concerned that the EU is preparing to use the sweeping Lisbon Treaty clause as the legal basis for a European bailout scheme.
Under the clause, an EU member state hit by “natural disasters or exceptional occurrences beyond its control” can receive “financial assistance” after a qualified majority vote by European leaders.
Supporters of the plan argue that “exceptional circumstances” includes market “attacks” on the euro.
”The euro’s 16 countries have already agreed it - that’s a majority," said a diplomat. "It’s a fait accompli. Those not in the euro - Britain, Poland, Sweden and other new EU members - can’t stop this."
Officials and diplomats have confirmed that Gordon Brown, the Prime Minister, was the last non-eurozone leader to be telephoned on Friday night by José Luis Rodríguez Zapatero, his Spanish oppositer number, to be warned about the EU plan.
Europe’s failure to contain Greece’s fiscal crisis last week triggered a 4.3 per cent drop in the euro and threatened to spark a global debt crisis.