The Fantasy World of the Eurozone

Angela Merkel and Nicholas Sarkozy
Image by Chesi - Fotos CC via Flickr

Nicholas Sarkozy Comforts the Distraught Victim of a Pick-Pocketing

It looks like the Euro is about to hit the buffers.

The Eurozone leaders are to meet tomorrow to discuss how to provide extra support to Greece. And they will discuss how to bail out Italy, which is the next carriage in the Euro-train that will be derailed. And how much pain they should impose on the Italians in exchange for “helping” them stay in the Euro.

The figures now being talked about are in the realm of the ridiculous. The EFSF, the Eurozone’s bailout fund, already has €440 billion at its disposal. Now France is talking about leveraging the fund somehow to increase its “firepower” to €2-3 trillion. They are disappointed that the Germans will “only” agree to €1 trillion.

We have also seen news this week that the world population has reached 7 billion.

Which means that the French want the EFSF increased to close to €500 for every man, woman and child on the planet.

And remember, they intend to lend that money to the indebted countries of Europe. The ones who can’t balance their budgets – and haven’t been able to for decades.

They want the likes of Greece, Italy and Spain to repay €500 for every single occupant of the planet. We all know the chances of them doing that are nil. Therefore, we are not talking about loans. We are talking about financial transfers from the North – mainly Germany – to the South.

But it gets even worse than that. The Southern countries won’t benefit. The beneficiaries will be the banks who have lent money to Greece, Spain and Italy.

Germany’s population is about 100 million. This deal is about every German taking on between €10,000 and €30,000 of debt. If you will, the deal is about Germans giving an early Christmas present to European banks of at least €10,000 for every German.

And how long will the new deal last? The media are talking about buying one year for the indebted countries to sort out their ills.

€10,000 for every German, to keep the Greeks and Italians staggering on for just one more year.

No doubt something will be cobbled together this time. But the price of kicking that can down the road is going up, and the end of that road is in sight.

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