What is remarkable about the "Euro Crisis" is the degree to which it is not a currency crisis at all, and, in Ireland's case, not even an economic crisis.  It is first and foremost a banking crisis, and secondly a bank regulation crisis, both caused by the ideology of neo-liberal economics having gained the upper hand in political circles.

The Irish Government stupidly socialised banking loses - even those of a bank, Anglo-Irish bank, which arguably was performing no good public service whatsoever, against even the moral hazard tenets of Capitalism.  As a result a state with a debt/GNP ratio of 25% has been turned into a near bankrupt state, run at the whim and in the interests of Sovereign Debt markets.  

In the meantime, the real Irish economy is still growing and generating a balance of payments surplus, despite the domestic market being devastated by (often hidden) tax increases, public expenditure cuts, and a loss of consumer and investor confidence.

The crisis is one of the financialising of economies and the inability of the political institutions to respond appropriately, first at the Irish national level, but now increasingly at the level of the EU as well.

What on earth has the IMF to contribute to this whole debacle - other than as the gleeful agents of disaster capitalism?  The Irish Government is probably right to resist the "aid" package - but is probably only doing so as a negotiating/stalling tactic -  and as a ploy to blame the resulting swingeing cutbacks and social devastation on the IMF.

The main opposition parties are playing along with this because they know that otherwise they will face similar harsh dilemas as soon as their turn in office comes, and at least now they can heap all the blame on the Government.

What is strikingly missing from all of this is any institutional force which can stand up for the interests of the EU as a whole - including its peripheral members.  The crisis - as Jake describes - is rapidly descending into a Core vs. Periphery battle with the Core doing all the effective fighting.

Perhaps only Merkel is in a position to take an effective lead as a European/world leader on this issue, but seems to be obsessed with reinforcing her domestic position as the leader of German nationalism.

Certainly the EU institutions themseves, and particularly the ECB, are not covering themselves in glory.  The future of the EU/Eurozone may well be at stake, but only (as Jake observes) because of a failure of political leadership, not because of any inherent economic/currency crisis itself.  

The EU/Eurozone economy as a whole is not in trouble, and Ireland's economy, even if it was, is far to small to have a material impact.  This is a crisis only because it suits certain interests to let it be a crisis and to let it linger as a crisis, and those same interests have no will or vision of what it takes to build a long-term stable EU/Eurozone polity, currency, and economy.

We are letting the marketista mobsters and banksters win.  Disaster capitalism at its most transparently obvious.  The fall-out is for the little guys now, but soon it will effect all but the offshore billionaires who thrive on such fall-out.  No wonder China et al are overtaking "the West".  Those whom the Gods seek to destroy they first make mad...

Index of Frank's Diaries