The final battle for the euro has started. Fighting is on all 17 fronts in Europe; 16 eurozone countries plus the UK. Whilst we aren’t in the eurozone, we have lent more to Ireland than Germany so our banks, mostly owned by our government, find themselves yet again holed below the waterline. The French and German banks will be waiting to see the details of the Irish surrender but one must ask what the point of the ECB bank stress tests were last summer apart from a complete waste of time; a fact known well in advance but ignored by central bankers, politicians and EU commissioners who should all be facing the firing squad.
If Cameron has pledged UK funds to this campaign, as he surely has given his government’s banking alliances, the next general election won’t be far off as the Tory right will be arming up to their teeth. How many times have we/will we be told that no further bank bail outs are necessary? When will we eventually be told that there is no money left for the next one and the trillions already blown have been completely wasted. That day can’t be far off as the queue for hand outs is not just around the block, it’s around the world.
After Ireland, does anyone seriously not believe Portugal will follow very quickly, Greece will default, someone will find an accounting “error” in Italy, and Spain will be left clutching a litany of sporting victories but very little else. It seems that along with austerity there will have to be some significant money printing too.
Austerity is also breaking out in the US; more as an unintended consequence of the real estate bubble and its nuclear fallout than deliberate policy. States and municipalities are finding it harder and harder to raise money to fund their activities so police forces are shrinking, schools closing, roads going back to dirt tracks even as the population living on food stamps grows – 43 million currently and up from 21 million last July when the recession officially ended…or did it?
So after the porcine periphery is bailed out and stitched up what are the chances of the euro core surviving? If Germany would only stop being so Teutonically efficient and allow the rest of Europe to get a slice of the trade surplus cake it might just hang together. But they can’t because they all use the same doomed currency! There is a lot more central bank printing ahead in Europe, but it won’t be euros.