Monday, October 06, 2008

Oh shit!

"We face extreme danger. Unless there is immediate intervention on every front by all the major powers acting in concert, we risk a disintegration of global finance within days. Nobody will be spared, unless they own gold bars."

This is Ambrose Evans-Pritchard giving his take on the fast unravelling crisis in Germany. Mind you, The Times is not much more encouraging and Euronews is citing an IMF spokesman saying that the Eurozone is facing its first "trial by ordeal".

Clearly, the "colleagues" see the danger. The Independent is reporting: "EU leaders tear up rules of eurozone". The headline is misleading as it seems to apply to the whole of the EU. The story tells us that: "Public spending curbs and rules against state subsidies will be thrown – temporarily – out of the window to rescue European banks from the abyss of the global financial crisis."

The paper also tells us that this was decided at the Saturday "summit". But the four leaders can't do that. Furthermore, not even the commission can do it as these provisions are enshrined in the treaties. But, if they do decide to throw way the rule book, the game is over, The EU is on its way out. After all, if the rules are useless for a crisis, what use are they at all?

Meanwhile, we get from The Guardian a further taste of the ensuing chaos as British officials react furiously to Angela Merkel's announcement that Germany will guarantee all bank deposits.

They are pointing out that she had given no indication of the move over the weekend during the Paris summit. The Treasury is still trying to establish the implications of the German move. And, course, there is Neelie to deal with. Or is McCreevy going to have the last laugh, as they all go down the pan together?

  • Other posts on the financial crisis here.