So, last night the eurocrats promised each other a new treaty. In that treaty we find the following among the main points:
EU countries agreed to provide €200bn in bilateral loans to the IMF to help tackle the debt, with €150bn of the total coming from the eurozone countries.
And guess what our ‘government’ announced today:
The cabinet is preparing to make extra cuts of up to €10bn in order to balance the government’s books, the Telegraaf reports on Friday.
The paper says sources in The Hague put say at least €6bn needs to be shaved off spending, but the total could be much higher. The cuts would come on top of the €18bn package already agreed and partly implemented.
Actions have consequences. The terrible nature of EUnion politics is, however, that the eurocrats take action, but we, the people, suffer the consequences.
A remind yourself, when next year you find your disposable income has decreased yet further, because our leaders have decided to get rid of mortgage interest deductibility, that this all started with Greece. And could have ended with Greece, had it been booted out of the euro-zone.
No group of people stays stuck halfway up the learning curve quite like those in charge of the European Union.
One thing over 95% of commentators would accept immediately is that passing laws ‘banning the future’ turned a Greek debt crisis into a eurozone disaster. That is to say, had the eurozone architects not closed the euro exit for all time, the fact is that Greece would’ve left (or been thrown out) some time around September 2010. Italy would never even have been targeted. Iberia and Ireland would still have been a mess; but the Irish have 75% dug themselves out of it, and with no other bailout commitments on the horizon, the EU could’ve controlled things in Spain and Portugal without recourse to Zen bazookas and endless summit meetings. Above all, ‘contagion’ would not be a credible concept. And it is the fear of infection has driven the market’s neurosis in relation to bond-holding since Day One.
We need to get out!
[UPDATE001] And there it is: The stability plan cooked up Thursday will cost the Netherlands 14 billion euros (NL). Of the 200 billion intended for loans to the IMF, the Dutch share is 7 percent.
Any guesses what the ultimate number on the new budget cuts is going to be? And you want to know a truly bizarre thing: We’re lending the IMF that money, so that the IMF can loan it out to PIIGS in trouble. Why this U-turn construction? I guess this is one of those cases where the intricacies of the geo-financial order go way over my head.