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Current Events => General Discussion => Topic started by: The Village Idiot on May 16, 2010, 02:55:34 PM

Title: “The markets had ceased to function” EU leaders pass blame for failed policies
Post by: The Village Idiot on May 16, 2010, 02:55:34 PM

http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/7730964/Forget-the-wolf-pack-the-ongoing-euro-crisis-was-caused-by-EMU.html

Ambrose Evans-Pritchard


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Mr Trichet was ash-white at the Brussels summit a week ago. He distributed charts of credit stress to every eurozone leader. By the time he had finished his hair-raising discourse, everybody round the table finally understood what they faced.

“The markets had ceased to function,” he told Der Spiegel. “There is still a risk of contagion. It can happen extremely fast, sometimes within hours.”

The spreads on Greek, Iberian, and Irish bonds have, of course, dropped since the ECB stepped in with direct purchases. But the euro rally fizzled fast, to be followed by a fresh plunge to a 18-month low of $1.24 against the dollar. European bank stocks have buckled again. Spain’s IBEX index fell 6.6pc in capitulation fever on Friday.

Geneva professor Charles Wyplosz said EU leaders made the error of overselling up their “shock and awe” package before establishing any political mechanism to mobilise such sums. “The fund is an empty shell,” he wrote at Vox EU. “Worse still, crucial principles have been sacrificed for the sake of unconvincing announcements.”


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