“Can we have a summit?” asked Zerohedge’s twitter feed last night. The effects of the last European summit (yet another agreement to agree at some undisclosed point in the future) are wearing off and the exuberance is out of the markets. Though central banks are printing money as fast as they can, asset prices are once more sinking around the world, and the euro has been flirting with the $1.30 level for the first time in a year.Since the exuberance of the summit last week, it’s become increasingly clear that the ECB isn’t going to backstop all European bond issues and that the process of developing a new set of agreements for Europe’s fiscal governance is going to be long and contentious with no guarantees about what it will produce. Greece is still sinking, and the ability of Italy and Spain to access capital markets on reasonable terms is by no means assured.Markets are beginning to understand that the Europeans who write the new treaties and organize the new institutions will be the same fallible people who made the current mess, and that they will be riven by the same disputes and their deliberations will reflect the same errors and the same vested interests that made the current system unworkable.This doesn’t mean that failure is guaranteed, but it does mean that summit communiques are not the same thing as solutions to pressing problems. America and the whole world need for Europe to succeed; that does not mean that it will.
From Eurofudge to Eurofail, Again
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