Day: December 9, 2011

Friday, 9 December 2011

07:52 – The EU summit has already ended in disaster, with the main Friday meeting having just gotten underway. Late last night, it was announced that UK PM David Cameron had, unexpectedly, proven that he possesses a backbone. Cameron vetoed Merkozy’s plan to federalize the EU and thereby eliminate the sovereignty of member nations.

Merkozy are trying to make the best of this fundamental split, claiming that because the 17 euro nations and some of the non-euro EU members agreed to form a “super eurozone”, they have achieved their goal. They’re wrong, of course, because their plans depend upon this clique having its decisions enforced by institutions that belong to the entire EU, including the UK. And the UK maintains a veto over such actions.

This summit is just like all the others have been, with grand plans being announced for the future, but without any details about how they’re to be approved by national legislatures, implemented, and, more importantly, paid for. More of the same, in other words. And more of the same just isn’t going to cut it. I expect the markets to be delighted, as usual, for a few days, after which reality will set in and the downward spiral will continue. Of course, this time S&P has already announced that if the summit doesn’t take concrete and effective steps to resolve the crisis, S&P may carry out its threatened downgrades of ratings on the sovereign debt of the entire EU, possibly as early as tomorrow. And nothing coming out of this summit is likely to satisfy S&P, or indeed anyone with a realistic view of the matter. We’ll see what happens.

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