Yet the markets are acting (again) like they anticipate an agreement, despite experience to the contrary as the BBC's Robert Peston observes:
Spokesman Steffen Seibert said a "package" of measures would be agreed upon at the EU summit in Brussels this coming Sunday.
"But nevertheless, the chancellor reminds [everyone] that the dreams that are emerging again, that on Monday everything will be resolved and everything will be over will again not be fulfilled," Seibert said.
Something slightly odd is going on.What's noticeable is that the tone of language used to describe the crisis is getting darker, Peston talks of possible Armageddon:
Markets are behaving as though European governments will definitely agree a rescue package for the eurozone next weekend and that the rescue package will sort all Europe's financial and economic woes.
But, by contrast, when I talk to ministers, regulators, bankers and investors they all say - which is a statement of the obvious - two things: that such a rescue cannot be taken for granted; and (perhaps more importantly) that whatever is agreed will not solve the eurozone's fundamental problem.
To state the bloomingly, bleedingly obvious, a domino effect of collapsing banks, triggered by their inability to borrow because of creditors' fears that the banks could not withstand sovereign defaults, would be the kind of Armageddon that would obviously be better averted.Even the hugely Euro- sympathetic Independent talks of possible meltdown and the return of a Great Depression:
The concerns of a lack of solution is echoed by a fine piece in the Telegraph, in which Liam Halligan rightly concludes that there are only, in essence, two options:
The rush to unwind would create massive doubts over the health of individual institutions, leading to a drying-up of credit. Lending would collapse, bankruptcies would soar and co-ordination among European policymakers would be nigh-on impossible to achieve. We would face financial anarchy on a scale big enough to throw Europe – and much of the rest of the world – into another Great Depression.
So we need a solution. And it's a solution that must accept collective responsibility. The north may want to blame the south but that is the wrong strategy. In the event of a euro meltdown, the northern creditors would suffer as much as anyone else. Berlin and Paris will now have to take political risks to come up with a solution. But it's better to take political risks – including a sharing of the burden between creditors and debtors – than to face monumental economic failure.
There really are only two coherent endgames, the first being that the euroland moves rapidly towards a fiscal union, the eurocrats’ dream. The prospects of that being successful are zero. Anyone who thinks otherwise knows nothing about European history and even less about contemporary politics.The only other durable scenario is...
...that the euro, in as orderly fashion as possible, is broken up. That, in my view, is the “something” now required, before this grotesque monetary experiment causes not just economic stagnation, or even a global financial meltdown, but fully-blown human conflict.Both of these options for different reasons are unpalatable; the first is particularly to the Germans and the second is to the EU. So what is happening is a game of trying to 'magic' a third solution which doesn't exist. Cue another round of weak proposals, superficial announcements, market turmoil and the lack of any coherent strategy. But time is running out fast.
We're sleep walking into a chaotic collapse of a major currency - the results of which will cause social and politician outcomes that don't even bear thinking about.
The solutions are obvious, and the results of failure to implement solutions are obvious. I make no apologies for continually trying to point them out. I do not want another "fully-blown human conflict" on the European continent.