The EU is out of time to deal with crisis
(MoneyWatch) COMMENTARY The European Union has run out of time and its leaders don't know it. They are proposing plans which - even if they could be done - would take months or years and they only have weeks. Spain's bank crisis will be resolved, for better or likely worse, soon.
It is indeed all over but shouting, as you can tell if you listen to the shouting.
European Central Bank President Mario Draghi is shouting for a clear vision of the euro. The EU's top financial minister, Olli Rehn, is shouting for more integration among the members. Bankrupt nations are shouting for the creation of euro bonds. The European Commission is shouting for Spain to come up with a bank bailout plan based on something besides wishful thinking.
What's odd about the EC's shout is that it is itself nothing but wishful thinking. According to Reuters, commission spokesman Amadeu Altafaj believes, "Spain should carry out the refinancing of its banking sector ... by market mechanisms or government funds rather than a European rescue which would have negative connotations." The market mechanism doesn't exist - that's why Bankia collapsed in the first place. As far as government funding goes: Spain is broke. It cannot afford to pay for all the public debt it already has.
Meanwhile, Draghi says a vision statement will help put out fires in a building already fully engulfed in flames: "How is the euro going to look like a certain number of years from now? What is the union vision that you have a certain number of years from now? The sooner this is specified, the better it is."
David Santschi, executive vice president-operations of TrimTabs Investment Research, puts it very well:
What worries me the most is the prevalence of lying and delusion in Europe. And by lying, I mean people being confronted with the problem and then not being honest about it. And by delusion I mean people being confronted with a problem and not understanding the problem or not understanding how big the problem is. So we have both lying and delusion on a grand scale in Europe.
This is now a situation where the best case scenario is that we are being lied to. This is the best case because if we are not being lied to it means these people really believe what they are saying. That, as Mr. Santschi says, is delusion.
While there are plenty of statistics and numbers which show how bad Europe's situation is right now, here's really all you have to know: Nigeria is cutting its foreign reserves kept in Euros "to minimize risk amid the European debt crisis." Nigeria.
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