by afew
Tue Dec 13th, 2011 at 04:27:11 AM EST
As expected (once again), the great fiscal-conservative union treaty compact sort-of agreement lost its wheels as markets reacted by selling European stocks and the euro, the private Wall Street corporations in charge of rating poured cold water, and Italian and Spanish spreads remained at unsustainable levels while CDSs rose.
There are optimists, of course. Nicolas Sarkozy (in an interview in Le Monde) says the details of the "pact" will be worked out before Christmas (though he also implicitly accepted the coming loss of France's triple-A, to be faced with cool, calm and determined application of the same policies that have already failed). Herman Van Rompuy says today:
EU's Van Rompuy says sees fiscal compact signed by March | Reuters
An intergovernmental treaty among up to 26 European Union countries on stricter fiscal rules will be finalised by March 2012, European Council President Herman Van Rompuy said on Tuesday. "Early March at the latest, this fiscal compact treaty will be signed," he said in a speech to the European Parliament in Strasbourg.
But according to Eurointelligence, reporting the FAZ (e-mail):
In the Commission’s view there is hardly anything really new in the euro agreement and what is new is legally very doubtful, Frankfurter Allgemeine Zeitung reports. The main problem according to the Commission is that the agreement for quasi-automatic sanctions would be part of an intergovernmental treaty and in international law that is of lesser legal value than a European treaty. As a consequence any country’s request to proceed according to the weaker deficit rules of the European treaty would mean that the stricter rules according to the intergovernmental treaty cannot be applied. Also the Commission points out that is doubtful that it and the European Court of Justice can legally be asked to perform surveillance duties on behalf of a subgroup of the EU.
So, even though all the Europeans (bar that silly Mr Cameron, who is now as-expected stuck between business-interests Scylla and Eurosceptic Charybdis) had decided to line up and take their nasty fiscal medicine, the cure isn't working. Here's a well-known doctor, writing just before the Friday summit:
It’s time for the IMF to step up in Europe | Lawrence Summers
After Friday’s summit, attention will and should shift to the IMF. It must act boldly but no one should ever forget a fundamental lesson of all past crises. The international community can provide support but a nation or a region’s prospect for prosperity depends ultimately on its own efforts.
One way or another, the Washington Brussels Brushington Consensus will straighten us out.
