Thursday, 26 August 2010

Euro Bailout Woes

The Euro crisis hasn't gone away as the Tap has noted here:
We've heard all the spin about the bank stress tests, and how the Euro will be protected, for example. But in the same space of time that this has been happening, the movement between the Euro and the Swiss Franc has been telling a very different story. You needed 1.50 Swiss Francs to buy one Euro six months ago. Today you need just over 1.30. It seems that the real money is not listening to the assurances that the Euro will survive, but getting out as fast as it can, to Switzerland or Tokyo.
A situation not helped by more and more cracks in EU unity regarding a bailout for Greece. First it was Slovakia in early August:
Slovakia’s parliament rejected the nation’s participation in a loan for Greece, ending the European Union’s unity in handling the sovereign-debt crisis.

The funds were to be part of a package designed to help Greece avoid default. Euro-are governments in May agreed to provide 80 billion euros of loans, with an additional 30 billion euros from the International Monetary Fund, in return for a Greek pledge to cut its budget deficit. Slovakia’s decision won’t prevent Greece from drawing on the loan, the EU said.
And now it appears that the Czech Republic has waded in and ruled out their help for Greece. Prime Minster Petr Necas tells the Austrian newspaper Kurier - although not providing many details (translated from Google):
Q What is the position of the Czech Republic plan to rescue Greece from the?

A We take the rescue plan note does not intend to go with the Greece-help. For the Czech Republic, the current delegation of financial powers from national level to the EU one not to be exceeded as crossing a line.

Q As you can see the position of the Czech Republic in the EU on enlargement?

A The Czech Republic is a responsible member of the European Union. We are proponents of budget discipline and the consistent enforcement of the Stability and Growth Pact. We are clearly in favour of its future expansion: Croatia and other countries in the region, also to Turkey or Iceland - each country, the interest in EU membership and has met the conditions should be given the opportunity to enjoy the benefits of the single market; that I consider the main advantage of the EU.
And he rules out Czech accession to the Euro:
Q Is the Czech Republic's accession to the euro zone is already in sight, and when?

A This raises the question of whether the euro zone after the problems they

is experiencing at all is able to absorb new members, even if they meet the Maastricht criteria, I will not call for an appointment do so.
German economist Professor Wilhelm Hankel put it:
"Germany and the few other still economically stable countries in the Eurozone are sinking money into a barrel without a bottom."
And already some are pressing the retreat button.

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