Tuesday, 3 March 2009

The clever men in Brussels

The following news story caught my eye today for two reasons. Firstly, the fact that such a statement needed to be made suggests that circumstances clearly point to a problem case that is being sized up currently. Secondly, it is rather coy to suggest that it "would not be clever to give out details in public." A cynic might be tempted to suggest that they're still figuring out what the solution is, and that when they eventually have figured something out they're far from certain that it would actually be able to solve such a crisis. Less cynical folks will take comfort that the clever men in Brussels are on the case and can get back to more important matters like moaning about bankers' bonuses.

BRUSSELS (AP) -- The European Union's top economy official said Tuesday that the 16 euro nations have a solution to rescue any member that risks economic collapse.

EU Monetary Affairs Commissioner Joaquin Almunia said it would not be clever to give out details in public "but the solution exists."

Investors see a risk that euro-zone nations like Ireland, Spain, Portugal, Greece and Italy could default on debt payments and are charging them more to borrow on government bonds.

Almunia said this solution would kick in before a member nation needed to approach the International Monetary Fund for a bailout.

"Don't fear, we are equipped intellectually, politically, economically to face this crisis scenario," he said in a speech at an event organized by the European Policy Centre think tank. "But by definition this kind of things should not be explained in public."

He also said "it is possible and it is reasonable" for two or more euro countries to issue bonds together but it is not "politically viable today because some important member states said no."

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