Eurozone Trillion Dollar Bailout is Doomed to Failure
The political masters of the Eurozone delivered their promised “shock and awe” just before Monday’s Asian financial markets opened. If the intention was to create a 24 hour surge in equity prices across the globe, the politicians’ desperate bid to “defend the euro at any price” achieved their transitory objective, at the cost of nearly $1 trillion. However, it is already becoming clear to investors and analysts globally that this trillion dollar joint Eurozone-IMF boondoggle will utterly fail. Already, the euro has given up almost all of its 24 hour euphoric gains, and is resuming its downward descent.
It is also increasingly clear that key decision makers within the Eurozone played fast and loose with the EMU constitution, by invoking the “exceptional circumstances” clause of Article 122 of the Lisbon Treaty governing the European Monetary Union. More problematic, it is becoming undeniably obvious that the supposedly independent European Central Bank took orders from the politicians, especially President Sarkozy of France. The ECB president, Jean-Claude Trichet, protests that there was no political interference in the ECB’s decision to start purchasing worthless government bonds from Greece, Portugal and the other insolvent nations that make up the so-called PIIGS. No one believes Jean-Claude Trichet, and Germany in particular will become increasingly alienated from the Eurozone as the ECB engages in the once forbidden monetary sin of quantitative easing.
At the price of one trillion dollars, the Eurozone has just paid the first instalment in what may prove to be the most costly funeral for a currency in modern financial history.