Over on ZeroHedge: The Imminent Failure Of The Eurozone.
The EMU started on the idea that it would bind the EU closer. In essence it was a political decision rather than an economic decision. They passed a stern rule that said no state could run of deficits of more than 3% of their GDP. Except for Estonia, Finland, and Luxembourg, all countries, including Germany, now exceed the limit [p above]. Thus their politicians sacrificed fiscal probity for political gains.
The EU, ECB, and the IMF are trying to establish a European Financial Stability Facility (EFSB) in order to further bail Greece out. They have already pledged €110 billion and they are trying to put another package together of €109 billion. But Finland insists that Greece puts up additional collateral, which is not possible. Since the collateral would be part of the bailout money, it would be, in essence, Germany and France guaranteeing Finland’s contribution.
Greece has missed every fiscal target it or its saviors has had. They are trying to get their deficit down to 7.6% of GDP through more austerity measures, but it looks like they will miss again (est. 8.5+%). Basically they are asking the Greeks to do something they don’t want to do, and they will no doubt take to the streets again in protest.
All this leading to the conclusion that the EU faces an insolvable problem. But it is one they created. You can’t have a monetary union without a fiscal union. At least when no nation is obligated to play fair. They either terminate the EMU or paper it over. There is no other practical fix, at least when economies of member states are declining.
Any day now, chaps. Any day now.
[UPDATE001] When it does happen, things will not be pretty. Via EURef, who also noted the ZH entry: Raedwald and Capitalist@Work A person warned counts for two. Or: Forewarned is fore-armed, as our cousins across the Small Pond would have it.