Tuesday, 16 November 2010

The EZ mess is getting very messy indeed

The metaphors regarding the messy state of affairs in the Eurozone are getting more graphical. This one from a Bloomberg article caught my eye

“The problem for the Irish state is that banking guarantee two years ago inextricably merged the country’s banking problems with the sovereign,” said Brian Lucey, associate professor of finance at Trinity College, Dublin. “It’s an omelette that is impossible to un-scramble at this stage.”

But just after composing this posting the following comments from the EU President were reported by Dow Jones and show that the mess is getting even messier.

The European Union won't survive if it fails to overcome a debt crisis plaguing the single currency area, the bloc's president Herman Van Rompuy said Tuesday.

"We're in a survival crisis," Van Rompuy said in a speech in Brussels hours from an assembly of euro finance ministers with Ireland and Portugal each teetering on the brink.

"We all have to work together in order to survive with the euro zone, because if we don't survive with the euro zone we will not survive with the European Union. But I'm very confident we will overcome this."

Ireland admitted Monday that it was holding talks about a rescue package of emergency aid, six months after EU nations had to rush to the rescue of Greece with a EUR110 billion bailout.

Portugal has also warned it is at "high" risk of needing financial support, unable to borrow money on open markets other than at prohibitive rates.

And just to round this out here are a couple of my own contributions to Twitter on the matters:

If EZ does crumble - the EU "center does not hold"- the EU project would, in hindsight, appear as fantastic technocratic folly built on hubris.

Apart from EZ "crisis", the failure of EU members to agree on a budget and not allow Brussels to set it, is starting to look like "constructive dismissal"

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