Agreement of People website

Sign here if you support the campaign for a real democracy


Our blogs


 

AWTW FacebookAWTW Twitter

Your Say


 

 

EU leaders delude themselves

Driven to the brink of mental breakdown by the rapidly deepening crisis, European leaders last night agreed on an attempt at self-delusional trickery.

The “voluntary” agreement by banks to take a 50% cut in the money they’re owed by the Greek government – a default in all but name – is a green light to a frenzy of profitable, intense activity by hedge funds.

They will gamble on the likelihood that banks will or will not act on the agreement or, instead, cash in on their Greek debt insurance policies, known as credit default swaps.

A desperately inadequate bail-out package, it is no more likely to be successful than the previous one hammered out only four months ago. That one ran into the sands of slowing economic growth turning into accelerating global contraction.

The new one, also calculated on the false promise of a recovery, relies on an undefined method for turning €250 billion of the remainder of the €440 billion financial stability fund left after handouts to Ireland, Portugal and Greece into €1 trillion.

It is called “leverage”, but neither of the two methods on offer can deliver what’s needed.

The first, which offers “insurance, or first-loss guarantees, to purchasers of euro zone debt in the primary market” is no more than a delaying tactic intended to draw more suckers into the black hole of global debt.

The second, “a special purpose investment vehicle aimed at attracting investment from China and Brazil” is nowhere near agreement. The best that could be said is that “it will be set up in the coming weeks”. Fat chance.

Europe’s sovereign debt crisis is a reflection at state level of the now toxic debt mountain that drove globalisation. Last night’s deal only reaches the margins of the problem and will deepen the recession.

Gerry Gold
Economics editor
27 October 2011

Bookmark and Share

Comments now closed

We do not store your name or email details, but may inform you if someone responds to your comment.

If you want weekly update messages please indicate and we will store your details in a secure database which is not shared with any other organisation.

Your name

Your E-mail
(we will not publish your E-mail)

Do you want Updates?

Anti-spam validation:compare< Please enter these letters>