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Reply #35: December 9 European Union Summit: Solution to the eurozone crisis or a fudge? [View All]

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xchrom Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Dec-07-11 08:52 AM
Response to Reply #18
35. December 9 European Union Summit: Solution to the eurozone crisis or a fudge?

The 27 countries of the EU will hold a summit on December 9 in what has been called the last chance to solve the eurozone financial crisis. However, in politics, 'last chances' are rarely final. The eurozone has already gone through at least four rescue packages, initially hailed as final solutions but later exposed as unsustainable fudges.

History may repeat itself at the December 9 summit. It could produce another package that enthuses optimists temporarily. Yet, this optimism could soon be eroded by continuing doubts on the ability of European politicians to deliver some sort of plausible fiscal union.

Angela Merkel of Germany visualises institutionalised austerity as the foundation of the new fiscal agreement, with strict fiscal rules enforced by an independent institution such as the European Court of Justice.

Any such institution charged with implementing sanctions would need a formal mandate to override national finance ministers. But this would imply a politically impossible surrender of sovereignty by other members. The contradiction may be papered over by noble expressions of intent at the summit, but will not go away.

Institutionalised austerity looks certain to sink Europe into serious recession in 2012, and it may well drag down the world economy along with it. This is a pity: economic news from the US is increasingly positive, and that country seems on the verge of finally coming out of its four-year stagnation.
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