Europe can't stop talking. Take yesterday. The German Chancellor, Angela Merkel, was in Brussels. Greece, she said, must remain part of the eurozone and get "a chance to get back on its feet".
Of course, to state the ambition that Greece should stay in the eurozone is the easy part. The more important questions, however, are these: Does Germany believe a Greek default inevitable? And, is Germany preparing a plan to manage such a default in the weeks ahead?
No European leader has yet explained how Greece, with no growth, can escape a debt burden that is approaching 370bn euros (£320bn). Even 60% of Greeks believe a default is coming.
And that brings us to the banks. Is the banking sector being prepared so that it can survive a Greek default?
There are the glimmers of a plan: strengthen the banks to withstand the shock of default and then build a massive firewall around Greece to avoid a domino effect. Again, it is a presumed strategy which has not been shared with the voters.
Why help the banks?
The markets were buoyed by yesterday's news that European authorities were working on a plan to put more capital into the banks. The details are harder to pin down. Chancellor Merkel says that Germany is ready to strengthen its banks if that is necessary. She said helping the banks was "justified, if we have a joint approach". Commission President Jose Manuel Barroso wants "co-ordinated action".
But, across Europe, how would such a re-capitalisation of the banks work? Should it be done on a pan-European basis or a national basis? And therein lies the rub. If France, for instance, was to pump money into its banks that would increase its debts and so put at risk its triple AAA rating.
And the most sensitive question will be asked by the people across Europe - why again do banks need propping up? It only underlines again how every move carries with it unforeseen consequences.
The IMF believes that between 100bn and 200bn euros would be needed to shore up Europe's banks against future shock. Some are suggesting the main bailout fund, the EFSF, be raided as soon as it comes into operation. It is already clear that too many demands will be made on the 440bn-euro facility.
Gulf with Britain
So, away from the eurozone to the British Conservative Party Conference in Manchester. David Cameron spoke about Europe. He probably did not want to, but it was unavoidable. He said: "As long as I am prime minister, this country will never join the euro."
It was a line intended for easy applause. It was also a line intended to obscure. No-one - not even the deepest united-Europe dreamer in the Liberal Democrats - believed that joining the euro would appear on the agenda during David Cameron's premiership. No, the much bigger question is, to what extent the prime minister will use this moment of European crisis to try and redefine Britain's relationship with the EU.
David Cameron said the EU had potential, but it was not working properly. He then mentioned his irritation on hearing that the EU was discussing diabetics and driving.
"What has that got to do with the single market?" he wondered. And that, in a phrase, reveals the big gulf between Britain and so many EU officials. The UK still sees the EU as principally a single market.
President Barroso is on record as saying that the EU is so much more than an economic union. The UK still sees what it wants to see.
For many European officials the euro, the single market, are all there to support the European project. The approach is to build an ever closer union incrementally, step by step. That is why an EU diplomatic service is being formed before there is a European foreign policy. Institutions develop a momentum of their own.
Call for candour
When President Barroso was meeting Angela Merkel yesterday, they used a much-feared phrase: 'treaty change".
"We may need treaty change for more integration, if current financial mechanisms are proved not to be enough."
Treaty changes move slowly through the European thicket, but they are words that David Cameron does not want to hear because - if it happens - his party will expect him to bargain, to get something in exchange for Britain's support.
Writing in the Financial Times, Howard Davies and David Green call for more candour from Europe's politicians, explaining why in a monetary union responsibility for debt has to be shared, or why purely national budgets cannot continue.
The truth is that in Europe there is a torrent of words but little clarity, and little levelling with the voters. Having a ringside seat at the eurozone crisis is to witness a torrent of daily comment about Europe and its troubled currency.
National leaders, unelected commissioners, IMF officials, the European commentariat can't stop talking. It even prompted the US Treasury Secretary, Tim Geithner, to urge Europe to speak less and, when it does, with one voice.
That is, of course, impossible because there is not an agreed plan. And often it is in what is left unsaid where truth lies.
Source: BBC
http://www.bbc.co.uk
Of course, to state the ambition that Greece should stay in the eurozone is the easy part. The more important questions, however, are these: Does Germany believe a Greek default inevitable? And, is Germany preparing a plan to manage such a default in the weeks ahead?
No European leader has yet explained how Greece, with no growth, can escape a debt burden that is approaching 370bn euros (£320bn). Even 60% of Greeks believe a default is coming.
And that brings us to the banks. Is the banking sector being prepared so that it can survive a Greek default?
There are the glimmers of a plan: strengthen the banks to withstand the shock of default and then build a massive firewall around Greece to avoid a domino effect. Again, it is a presumed strategy which has not been shared with the voters.
Why help the banks?
The markets were buoyed by yesterday's news that European authorities were working on a plan to put more capital into the banks. The details are harder to pin down. Chancellor Merkel says that Germany is ready to strengthen its banks if that is necessary. She said helping the banks was "justified, if we have a joint approach". Commission President Jose Manuel Barroso wants "co-ordinated action".
But, across Europe, how would such a re-capitalisation of the banks work? Should it be done on a pan-European basis or a national basis? And therein lies the rub. If France, for instance, was to pump money into its banks that would increase its debts and so put at risk its triple AAA rating.
And the most sensitive question will be asked by the people across Europe - why again do banks need propping up? It only underlines again how every move carries with it unforeseen consequences.
The IMF believes that between 100bn and 200bn euros would be needed to shore up Europe's banks against future shock. Some are suggesting the main bailout fund, the EFSF, be raided as soon as it comes into operation. It is already clear that too many demands will be made on the 440bn-euro facility.
Gulf with Britain
So, away from the eurozone to the British Conservative Party Conference in Manchester. David Cameron spoke about Europe. He probably did not want to, but it was unavoidable. He said: "As long as I am prime minister, this country will never join the euro."
It was a line intended for easy applause. It was also a line intended to obscure. No-one - not even the deepest united-Europe dreamer in the Liberal Democrats - believed that joining the euro would appear on the agenda during David Cameron's premiership. No, the much bigger question is, to what extent the prime minister will use this moment of European crisis to try and redefine Britain's relationship with the EU.
David Cameron said the EU had potential, but it was not working properly. He then mentioned his irritation on hearing that the EU was discussing diabetics and driving.
"What has that got to do with the single market?" he wondered. And that, in a phrase, reveals the big gulf between Britain and so many EU officials. The UK still sees the EU as principally a single market.
President Barroso is on record as saying that the EU is so much more than an economic union. The UK still sees what it wants to see.
For many European officials the euro, the single market, are all there to support the European project. The approach is to build an ever closer union incrementally, step by step. That is why an EU diplomatic service is being formed before there is a European foreign policy. Institutions develop a momentum of their own.
Call for candour
When President Barroso was meeting Angela Merkel yesterday, they used a much-feared phrase: 'treaty change".
"We may need treaty change for more integration, if current financial mechanisms are proved not to be enough."
Treaty changes move slowly through the European thicket, but they are words that David Cameron does not want to hear because - if it happens - his party will expect him to bargain, to get something in exchange for Britain's support.
Writing in the Financial Times, Howard Davies and David Green call for more candour from Europe's politicians, explaining why in a monetary union responsibility for debt has to be shared, or why purely national budgets cannot continue.
The truth is that in Europe there is a torrent of words but little clarity, and little levelling with the voters. Having a ringside seat at the eurozone crisis is to witness a torrent of daily comment about Europe and its troubled currency.
National leaders, unelected commissioners, IMF officials, the European commentariat can't stop talking. It even prompted the US Treasury Secretary, Tim Geithner, to urge Europe to speak less and, when it does, with one voice.
That is, of course, impossible because there is not an agreed plan. And often it is in what is left unsaid where truth lies.
Source: BBC
http://www.bbc.co.uk
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