The Greek Crisis is Becoming a Euro-Crisis!

Devil's Marbleyard: PigImage by Vicky TGAW via Flickr
Now you can add Italy to the original PIGS quartet!  We're up to PIIGS, and what other letters are next?

The UK Guardian came up with this wonderful Euro-crisis Song that explains it all: click HERE. 

Enjoyed it? Yes, better laugh than cry over it.

Friday 15 July 2011 or, what is more likely, Monday 18th,  the European Big Heads will again have a "special summit meeting" in Brussels  to "decide" on how to proceed. So far, "decisions" have eluded them.

Still, it could be D-Day for the Euro.

Or should I say a C-Day? D is for default, natch, and C is for crisis.

How did we ever get there? The credit rating agencies have added fuel to the fire, no question about it, but the fire was started by the Europeans themselves.

Now everybody suddenly realizes that the Euro does not exist. It's a figment of the (European) imagination. A daydream that hasn't come to pass. Because a currency needs a Central Bank (the Euro's got that) and a Treasury/Finance Ministry, whatever you want to call it, i.e. somebody who levies taxes and finances the government activities, whatever they are (this, the Euro hasn't got).  

There's not one Treasury or Finance Ministry behind the Euro, but 17 - one for each member of the Eurozone.

Crazy! How do you expect these guys to agree on anything? Particularly on sensitive political issues like pensions, retirement age, tax rates etc Believe me, they cannot agree on anything. Not even on the size of the bailout fund needed to protect not just the PIGS but the PIIGS! 

The markets did not need the credit rating agencies to tell them that this was an unworkable arrangement. And that the bailout or "rescue fund" so far agreed to might bail out Greece, but certainly NOT Italy, the third largest Eurozone economy.

This is not funny. Because if Italy goes under, banks around the world will go down - yes, in America too. The 2008 crisis brought on by Lehman's demise will look like a dainty hors d'oeuvre. A light antipasto. This is going to be the real thing, a main dish that no one will be able to digest, not even the biggest American banks. True, Italians themselves hold about half of their debt - problem is: the debt is huge. And if you add the afore-mentioned PIGS to the soup, you have a truly hellish stew of hundreds of billions of debt going sour all of a sudden!

Our savvy European politicians are talking about increasing the rescue fund. Even the British who are out of the Eurozone are worried: after all, 40% of their exports go to the Eurozone and who likes to lose a lucrative market?

What fund size will do the trick? I don't know, I don't have the numbers: much of the data is kept hidden from us poor citizens, and in any case, the multiplying effect of the (still-unregulated) derivatives market are hard to predict. All one can be sure of, is that it's going to be hard, very, very hard to achieve.

Okay, Italy, like the Wall Street behemoths, is reputed to be  "too big to fail". Is that a consolation? What if it does fail? Nothing is ever impossible.

So why limit the rescue mechamisms to a bailout fund? Why not consider Euro-bonds that would be guaranteed by ALL the Eurozone member countries, Germany included? In other words, pull together all the financial might of all 17 members (minus the PIIGS, of course - but they have to follow suit and toe the line - which they already are, just consider all those austerity measures in place...)

I'm singling out Germany because at this point, Germany should stop dragging its feet: if the crisis has reached the current dramatic point of no-return, it's because of Germany's delays and worse, its adamant refusal some months back to consider the floating of euro-bonds, as originally proposed by Juncker and Tremonti.

Let's not forget  that so far Germany has been the great winner in the Euro-zone, the one country that has truly benefited from the Euro.

Germany, it's time you paid up and join in to save the Euro!



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