Euro crisis: April is the cruellest month…

Apart from all the others…  And it doesn’t matter how big your umbrella is.  BBC Europe editor, Gavin Hewitt, on springtime in Europe

What is being exposed is a major flaw with Mrs Merkel’s fiscal pact. It is undemocratic. It ties the hands of future governments – and that, of course, was its intention but it doesn’t stop voters opposing further cuts.

In the eurozone, deficits are being reduced. But debt – in many cases – is still growing. Growth is almost non-existent. Recession has returned for countries like Spain and Italy. The gap between the German economy and the southern economies is only widening.

Privately in Brussels there are fears that a revolt against more cuts will draw them in. They have become the enforcers of austerity. Some officials are worrying they will be caught in the backlash. Last week over 30% of French voters supported parties hostile to Brussels. The vote was dismissed as “populism” – which is the default response to most criticism – but they were the votes of real people.

The economist Nouriel Roubini described the eurozone crisis as a “slow-motion train wreck”.

As we go into May, there are signs of a revolt against austerity gathering pace. If it happens it will be a new and unpredictable phase of the eurozone crisis.

Read the whole thing.

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  • Zig70

    So how do you fix it. That’s what I want to read about. Flags nailed to the mast. The Greeks showed the way and you didn’t here a whimper from the markets. They just sold at +10% and waited for the fall. Deflate the debt bubble. Hopefully events will overtake the conservative Irish as I don’t think they’ll put down the shovel long enough to think about it.

  • Pete Baker

    “So how do you fix it.”

    Well, that depends on what ‘it’ is. Doesn’t it.

  • dwatch

    Blaming Merkel’s fiscal pact maybe one way of passing the blame by Greece, Italy Spain & Ireland but if the Euro collapses what would happen to the EU in general is the question? Ireland’s 40-year bonanza of foreign aid has greatly decreased. The ROI received 41 billion euro handouts from Brussels since they joined the EU in 1973.
    See here:

  • Mick Fealty

    That’s why the ESM has been built up, to protect those inside and withstand shocks like Greece. Ireland can default of course. But it won’t be pretty. Not sure that even SF is pushing for that one any more.

  • thethoughtfulone

    “It” is the single european currency zone and the common fiscal policies which go with it, “it” is a totally flawed concept, “it” cannot be fixed and “it” needs to be terminated by whichever method the combined genius of the highly paid eurocrats deem most practical.

    Sadly however the inability or lack of bravery on the part of europes political leaders to admit to or grasp what needs to be done is increasingly turning a crisis into a catastrophe. The only thing is that the catastrophe hasn’t happened yet, but the longer it drags on the bigger it’s going to be and the long term implications so much greater.

  • tuatha

    Mick – any chance of a sip of that Kool-Aid? The ESM is to protect those inside?! Well yeh, if by inside you mean within the Rhine, Elbe-Niess & Danube Flussen?
    Ireland is going to (continue to) cop it in the neck, courtesy of our own Quisling/Vichy grovellers.
    And a default (such a negative term – how about ‘shove it’?) will leave the ‘senior’ (who the hell are the ‘juniors’ – not that I give a flying..) bondholders scratching about for a crust NOT.
    The soi disant Irish debt was a result of a corrupt/cretinous/culpable (not that these terms are exclusionary) decision by the government of the day to guarantee, not the deposits of the citizenry, but the DEBTS of a bunch of shysters, gombeens and chancers, specifically Angloirish.
    It was NOT a bank (hands up those who paid in their savings over the counter.. assuming that anyone not ‘connected’ could find it) but a clearing house for ECB euros at 1% shovelled into the wheelbarrows of those who would otherwise have been fortunate to have a day start with a shovel & their own wellies.
    If you want to talk about “UGLY”, try imagining, 5, 10, 20 years down the track, with the population still being squeezed to pay for the caviar of the Continentals.
    Don’t think so, die on your feet or live on your knees.

  • Mick Fealty


    “The ESM is to protect those inside?! Well yeh, if by inside you mean within the Rhine, Elbe-Niess & Danube Flussen?”

    And others. But yes, you are right. I was not thinking Ireland or any of the PIGS, or potential future PIGS.

  • Neville Bagnall

    For what its worth, a view from Germany on the likely outworking of the Hollande initiative:

    “Viewed from this perspective, the conflict between Merkel and Hollande is also an attempt to both nurture the illusions of their respective supporters and to pretend that everything in Europe could be restored to the way it once was. It’s an attempt to escape the bitter truths of the euro crisis, which is dominated by one truth in particular: If the European currency is to be secured over the long term, additional sacrifices are inevitable, both in the north and the south.”


    “And so it seems that the loud conflict between Paris and Berlin has momentarily eclipsed what will actually be on the negotiating table between the two countries when the French presidential election is over. That is, no change in Merkel’s austerity drive, but additional growth projects for southern Europe and more power for Brussels — yet all of it done as cheaply as possible.”

    Read the whole thing:,1518,830594,00.html


    “The Süddeutsche Zeitung newspaper is reporting in its Thursday edition that the European Central Bank and Euro Group member countries are exploring strategies at the highest level to allow financial institutions direct access to funds from the European Stability Mechanism, the permanent bailout fund that is to be created this summer. The change would mean that banks, rather than countries, could turn to the fund for aid during a financial sector crisis. … German Finance Minister Wolfgang Schäuble … expressed his vehement opposition…”


  • Zig70

    From my perspective ‘it’ is all down to the bad debt that the financial sector is holding. The banks won’t lend until the maths says it is prudent and the maths say there is a risky big debt pile. What the EU has done by managing the bubble is created a 20yr controlled deflation and a 20yr freeze on lending. You wouldn’t want a default or exit from the Euro but to repeat the Greek scenario of partial default and staying within the euro is ideal. Personally I think an EU nama option where the nationality is taken out of the debt and dealt with in the markets where it belongs is the better option. But first we need common sense on what is a serviceable debt. The first question I want to ask the EU leaders is what is preventing that question of common sense being tackled with any of the criteria that existing banks would use for debt management.
    If anything it will keep Slugger and the FT in comment for a long while yet.

  • DC

    ‘It’ to me is the financial crash, triggered by banks lending money as credit which they never had the cash to cover in the first place, this credit became available largely because there were insurance companies – AIG – at hand to supposedly stand over it, but of course they came crashing down too. In stepped the government to act as insurer and lender of last resort.

    Private banking debt has come over to the public sector and now it needs repaid to the very very wealthy who bought the government bonds which were used to step in and bail out the banks.

    ‘It’ has now switched from being globalised financial credit to nationalised, toxic, government debt. Because governments across the western world stepped in to stop deflation, depression and riots breaking out in the streets and at Westminster.

  • What Europe badly needs is some honesty from their political leaders, starting with the Germans. Do they really think that if you take austerity to the levels they say should happen around Europe that growth will then happen, as if by magic?

    Of course, if you keep cutting, you will eventually get growth because people’s survival instincts will begin to drive it. But at what cost? Its about time the Germans gave an honest answer to that question.

    The Germans, on the one hand, they say that they believe in the Euro. On the other, they say they will not commit Germany to Eurobonds or to underwriting the ESM to the levels that it needs to be at.

    The unsaid message coming from Germany is that it does not believe the Euro will survive.