Weekly Standard
December 20, 2010
It has been easy to snicker in recent weeks at the politicians who designed the euro, which appears on the verge of collapse after a decade as the common currency of a dozen countries in the European Union. Last May, the continent’s finance ministers put together a $145-billion package to bail out the corrupt Greek state. When that failed to calm markets, a new trillion-dollar European Financial Stability Facility was set up with money from the EU and the International Monetary Fund. It was meant to awe any speculators away from betting against the euro. It didn’t work.
Since October, the yields on Irish, Portuguese, Spanish, and even Italian and Belgian bonds have risen dangerously. While Americans were celebrating Thanksgiving, European finance ministers tapped the EFSF to buy Irish bonds and set up a fresh $113-billion rescue plan. The numbers surrounding the plan sound like a joke. It comes to about $25,000 for every man, woman, and child in Ireland. Ireland’s budget deficit is 32 percent of GDP.
When you look at the debts that other countries have to roll over very soon—Italy, for instance, reportedly needs to raise well over $150 billion in the first quarter of next year alone—the sufficiency of the EFSF looks dubious, and the political landscape across Europe looks apocalyptic. The Irish government will fall when the Green party leaves it in a month. Silvio Berlusconi faces a confidence vote in Italy on December 14. Demonstrations against austerity programs have degenerated into riots not just in Greece but also in France.
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