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Post Partisan
Posted at 01:34 PM ET, 12/05/2011

Call me a euro-skeptic


Markets are rising again Monday on news of a supposedly big German-French agreement on proposed euro-zone treaty changes, in advance of a European Union summit later this week. But I’m totally confused.

I thought the euro zone already had agreements that member countries couldn’t run deficits in excess of 3 percent of GDP.  Is the new agreement a way of saying “we really mean it this time?” So much so that you’ll have to put a “golden rule” in the union’s constitution to enshrine the principle? And there will now be more “automaticity” in fining a country who violates the pledge?  Is that really an effective new mechanism?

Plus, early reports also say that a major breakthrough was German Chancellor Angela Merkel agreeing, according to the Financial Times, that “private sector bondholders would not in future be asked to bear some of the losses in sovereign debt restructurings, as she insisted on earlier this year in the case of Greece.” But that sounds like a virtual guarantee for big banks and other investors that recklessly bought sovereign debt without exercising any actual judgment as to the country’s creditworthiness.

Isn’t this whole “don’t worry, we’ll bail you out if things go bad” phenomenon a big piece of what has driven the global banking system into recurring collapses in the first place?  If the Germans have caved in the name of, as Merkel put it, making Europe a “safe place to invest,” who is left to stand up for requiring banks to actually behave responsibly in the future? And if this bailout of banks’ bond portfolios will again pad the bonuses of bankers who made the failed bets, won’t it be time to Occupy Brussels?

Plus, where’s the plan to rekindle European growth, not just European austerity – since with no growth, there’s no real answer?

Doubtless we’ll learn more, but for now I’m confused and skeptical.

By  |  01:34 PM ET, 12/05/2011

 
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