Monday 8 August 2011

Tomorrow Is Another Day

Much press attention is currently on the disturbances in North London, however tomorrow sees another significant day regarding the Euro. Over the weekend, the US credit rating has been downgraded, Cyprus is in trouble and the ECB is fighting amongst itself to try to resolve the Euro crisis.

A deal has apparently been struck for the European Central Bank to buy Italian and Spanish bonds, though given how quickly the last EU deal unravelled - in less than a week - optimism that this latest agreement will work must be in short supply.

It's pretty clear that EU leadership has been found wanting on a massive scale - no one is prepared to make the great leap forward to fiscal union to appease the markets nor is anyone prepared to instigate an orderly break-up of the eurozone. Fudge is the name of the game, and while the financial markets sometimes over-reacts what they are particularly good at is smoking out bullshit. The Euro is being found out

Ambrose Evans-Pritchard from the Telegraph reports that Germany is losing patience with the whole Euro project:

Even Germany's most ardent pro-Europeans seem to have given up trying to find a solution. They are building an alibi for EMU break-up instead.

This is a dangerous moment for the world. It is still possible that the growth scare of recent months will prove a false alarm.

Yet the Bank for International Settlements is surely right that we are pushing ever closer to the limits of a model that relies on artificial stimulus to keep stealing extra prosperity from the future. There is ever less to steal.

It looks set to be a very bumpy week.


  1. TBF: Methinks the media and the country should get a sense of priority. Yes Tottenham/Enfield etc is tragic and distasteful, but what is happening on the continent is likkely to start a firestorm that will engulf us all - conveniently ignored by some.........

  2. @WfW Media? Sense of priority? You know better than that WfW :-) Agree though, amazing how there;s a 'black hole' in media coverage where Europe is concerned - it's almost like the continent doesn't exist sometimes.