Reply #51: SURVIVAL OF THE Euro: It's all down to Timo Of Finland (sorry!) [View All]

[Demeter]

http://www.bbc.co.uk/blogs/newsnight/paulmason/2011/03/euro_its_all_down_to_timo_of_f.html

WHEN EVEN THE BRITS ARE GETTING CATTY, YOU KNOW THERE'S DANGER AFOOT...

A short summary of the Euro snafu that's about to happen:

1) Tomorrow Ireland publishes the results of bank stress tests. It has to find - or the EU has to find - another E18-25bn to shore up its failing banks.
2) It goes to Brussels and demands what it asked for three weeks ago and failed to get: better terms, lower interest rates, greater forebearance from the bailout fund that is keeping its banking system alive (or I should say actively zombified)
3) Meanwhile in Lisbon they do the same, or try to - hampered only by the fact that the government just lost its parliamentary majority (and parliament may be dissolved Thursday).
4) Meanwhile, in Greece, beset by continued downgrades of their credit rating and declining prospects of being able to grow their way out of fiscal crisis, they join in the clamour for a more generous deal.
5) Meanwhile in Helsinki, voters go on ticking the box on opinion poll questionnaires that is marked "True Finn": Finland is stymied from putting up its share of the proposed bailout fund because parliament is dissolved: after 17 April, if the True Finns (leader, Millwall fan Timo Soini) join a coalition with the centre right, they may stymie the new mechanism full stop.
6) It all points towards the thing the EU leaders have been trying to head off since the December crisis: a chaotic default on peripheral debt, blowing apart the carefully crafted compromises that have allowed the interim bailout mechanism to work.
7) Then the question is - if Ireland, Portugal and Greece default - how much the governments of northern Europe are on the hook for? Because it is big European banks - in Spain, Germany, France and, oh, Britain - that will see their loans go up in smoke in any default...