The euro initially climbed to $1.336 on news that the European summit had reached agreement on a permanent mechanism to back up governments suffering from a debt crisis. And then the currency gave back all its gain, sinking to $1.3148, as markets realized that the “agreement” contained no progress on the issues that have divided the Eurozone.
Another weekend, more band-aids. Will the latest round succeed in convincing financial markets that the bleeding in the euro has stopped when earlier applications have failed? The results this morning are mixed
Support for the Irish government of Prime Minister Brian Cowen fell apart late yesterday after the Green Party said it would pull out of the ruling coalition. Cowen called for elections early in 2011. Think this made global financial markets happy?
The challenge now will be producing enough progress on the details on a reasonable time table that the financial markets don’t begin to suspect that Sunday’s announcement was just ginned together for the markets’ benefit.
An expression of confidence in Ireland from European finance ministers instead of an announcement of a concrete bailout for Ireland and its troubled banks is going to leave the euro vulnerable for a fall November 17. And to make matters worse, November 16, ended with a rather public airing of squabbles inside the monetary union.
Why is the European Union so anxious to get an Irish deal done?Look to today’s news that the Greek budget is in worse shape than anyone thought—again. Revised numbers show that Greece’s 2009 deficit wasn’t 13.6% but actually 15.4% of GDP.
