The EU heads of state are out with a joint statement that appears to confirm what was reported late this afternoon – there is no bazooka on deck here. In fact, it looks like a lot more of the same things we’ve been doing with an emphasis on more austerity – the one thing that is clearly not working. You can read the full press release here.
The key points (since they’re obviously treating all of this as if it’s a big joke, I figure I might as well start doing the same):
- “We commit to establishing a new fiscal rule”
Translation: Germany wants to impose further austerity on the periphery. It’s obviously not helping them solve their debt crisis and the simple math behind the periphery debt issues shows that austerity via growth will not be enough to overcome this problem.
- “The rules governing the Excessive Deficit Procedure (Article 126 of the TFEU) will be reinforced for euro area Member States.”
Translation: Germany is really serious about austerity.
- “If the Commission identifies particularly serious non-compliance with the Stability and Growth Pact, it will request a revised draft budgetary plan.”
Translation: Germany is really really serious about austerity.
- “The European Financial Stability Facility (EFSF) leveraging will be rapidly deployed, through the two concrete options agreed upon by the Eurogroup on 29 November.”
Translation: Supplying liquidity to bankrupt nations hasn’t worked thus far, but we’re going to keep trying. We also know this doesn’t solve the root of the problem (the flawed single currency lacking sovereignty), but we’re hoping the markets will overlook that.
- “We agree on an acceleration of the entry into force of the European Stability Mechanism (ESM) treaty.”
Translation: We still don’t understand that the markets aren’t going to wait until next summer for this crisis to pass, but this sounds better than admitting that we just spent all week eating moules-frites.
- “euro area and other Member States will consider, and confirm within 10 days, the provision of additional resources for the IMF of up to EUR 200 billion (USD 270 billion), in the form of bilateral loans, to ensure that the IMF has adequate resources to deal with the crisis.”
Translation: We really can’t agree on anything substantive so an IMF loan sounds good. Nevermind that it does nothing to resolve the inherent flaw in the currency. We know that only Europe can solves Europe’s faulty currency, but maybe some foreigners would like to come eat the rest of these moules-frites we have leftover?
- “Concerning the involvement of the private sector, we will strictly adhere to the well established IMF principles and practices.”