Jean-Claude Juncker: “The Eurogroup is working on a proposal, which I hope all eurozone member states will be happy with”

The warning from EU Monetary Affairs Commissioner Olli Rehn came after a turbulent summer for markets across the globe, as investors worried about a potential new recession in the United States, the eurozone’s ability to resolve its debt crisis and the health of European banks.

“The financial markets and the real economy move now more in synchrony, which makes me seriously concerned about continued financial turbulence spilling over to and potentially harming the recovery of the real economy,” Mr Rehn told European politicians.

That statement is a sharp turnaround from comments in recent months, when he said growth in the EU was strengthening despite the market jitters.

And the earlier noted BBC report adds

[Mr Rehn] said that the targets set for Greek privatisations might have to be revised because of falls on the Athens stock exchange.

“The value of some of the assets earmarked for privatisation has been declining in recent quarters,” he said.

“In case of difficulties in meeting the targets, the rhythm of disposal of state-owned assets and the stakes offered for sale could be revised in order to ensure the quarterly privatisation targets are achieved.”

He added that the recent turmoil on the financial markets had contributed to short-term growth prospects having “somewhat worsened compared to our spring forecast”.

The European Commission had predicted the eurozone would grow by 1.8% this year. It will release a new forecast on 15 September.

Will individual governments agree to anything before that date?

In the Irish Times, Dominic Coyle doesn’t think so.

In the aftermath of the first stage of the financial crisis, triggered by the collapse of Lehman Brothers, European Central Bank president Jean Claude Trichet had hailed the strength of the euro in meeting that challenge. “Would Europe have been able to act as swiftly, decisively and coherently if we did not have the single currency uniting us?” he asked. It seems a hollow boast now.

True, the ECB has shown more leadership than others, agreeing eventually to underpin the debt of Italy and Spain when those countries threatened to unravel but only after securing tough commitments to fiscal reform, particularly in the case of Italy. Still, even those decisions seemed reluctant, made by a governing council whose divisions quickly became public.

The ECB’s action appears decisive only next to the political dithering of Europe’s political leaders. It is now five weeks since Europe’s leaders agreed the terms of a beefed-up bailout package and further help for Greece. Not a single country has yet approved it – in fact, despite the crisis, the only European parliaments recalled over the summer break were those of the UK (over the riots) and Italy (where most members simply did not bother turning up to discuss critical austerity measures). It will be the end of next month – and possibly into October – before the ratification process is complete.

And even before that, there is now a widespread acceptance that more needs to be done. Yet there is still no serious debate on what many commentators now believe is the only long-term path to viability for the euro – a stronger fiscal union.

Well, that is an option.  But it’s not the only one…

And its still dependent on resolving “the political trilemma.” 

[Europe is still sexy! – Ed]  Of course it is.

And, as I’ve been saying, for supporters of the “European Project”, the options are stark.

And when it’s that serious, you have to lie…