Solving the crisis? We haven't the foggiest
by our secret columnist in Brussels
With the summer holidays in full swing Schadenfreude despairs at the long list of problems facing the eurozone and the wider EU
In the glory days, one of the catchwords of the old London Stock Exchange was "sell in May and go away". The update would be shut down in August – we haven't the foggiest". The list:
Greece needs another tranche of bail-out funds but does not satisfy the conditions attaching to the first installments. Despite denials Spain needs aid, including a chunk for its autonomous but not self-sufficient regions.
Italy faces unsustainable borrowing costs. The European Central Bank now seems to think that it can buy government bonds on the primary market – that is, unconditional loans.
Devaluation of ex-euro funds might help the current account of the countries concerned but increases the debt burden. Germany will not know if it can contribute to the new European Stability Mechanism until the constitutional court decides if due parliamentary process has been complied with.
Britain's AAA credit status is at risk because of its contraction and exposure to eurozone risks. Euro depositors are seeking safer havens, even in non-interest bearing accounts.
Some distinguished economists, especially, in the United States, are saying "spend for growth". Nobody else dares say so. In the United Kingdom, Labour party shadow chancellor Ed Balls has not recently reverted to his renowned neo-classical endogenous growth theory.
As a side show, political capos in Hungary and Romania are busily tearing up their constitutions to stifle opposition, breaching also their treaty obligations. The European Union watches.
Van Rompuy optimistic on EU economy at G8
The existential threat to the euro has been overcome and the EU's strategy to exit the economic crisis is paying dividends, Herman Van Rompuy says ahead of the G8 summit in Northern Ireland