I was reading Spiegel Online, a German publication, and an interview with Richard Sulik, the head of the Slovak Freedom and Solidarity party, caught my eye. The excerpt that follows is not only true, it further highlights the “other” problem.
SPIEGEL ONLINE: Slovakia has yet to approve the expansion of the euro backstop fund, the European Financial Stability Facility (EFSF), because your Freedom and Solidarity (SaS) party is blocking the reform. If a majority of Slovak parliamentarians don't support the EFSF expansion, it could ultimately mean the end of the common currency.
Sulik: The opposite is actually the case. The greatest threat to the euro is the bailout fund itself.
SPIEGEL ONLINE: How so?
Sulik: It's an attempt to use fresh debt to solve the debt crisis. That will never work. But, for me, the main issue is protecting the money of Slovak taxpayers. We're supposed to contribute the largest share of the bailout fund measured in terms of economic strength. That's unacceptable.
Not only is he correct, because “fresh debt to solve the debt crisis” without true reform behind it is as mind boggling as it gets, but his position was also characterized as “almost nationalist." Yes it is, and his sentiment resonates across borders in varying degrees.
Thus the major impediment to move Europe forward is the ongoing strong distinction between the needs of the French, Germans, Slovakians and all the other members, literally obliterating the possibility to form a true union. During the U.S. crisis everyone thought as an American, and smack in the middle of the housing debacle, hairs weren’t being split over whether New York was contributing too much to Nevada, or Texas to Florida. A European Union is doable, but the mentality must change.
Although it sounds good, ultimately the EFSF – European Financial Stability Facility – will not be large enough to contain the bleeding, and this ratification exercise will become moot. On Tuesday Slovakia’s parliament rejected the rescue fund but it was only due to political maneuvering, according to a Reuters report.
Political analyst Grigorij Meseznikov said that, while talks on forming a new cabinet may take weeks, approval of the EFSF plan could come fast. "I expect that quite quickly after the fall of this cabinet the rescue fund will be approved, within four days, because we are in a newly defined situation and Fico will position himself as the savior of the eurozone and Slovakia," he said.
But didn’t Angela Merkel and Nicholas Sarkozy say that they have a plan? Yes, indeed, but that never stopped European bureaucrats from trampling all over each other, also according to Reuters.
EU policymakers will use the data to determine how some banks must recapitalize in a bid to restore confidence in the battered sector. Meanwhile, Jose Manuel Barroso, president of the European Union's executive European Commission, said he will propose a bank recapitalization plan on Wednesday even though there is no agreement yet on where the money will come from.
“Where will the money come from?” Yes, I had forgotten about that. To close, Eurogroup Chairman Jean-Claude Juncker provided his “Top Ten” list on how to solve the crisis, as reported by Reuters, which was potentially inspired by David Letterman - and we need comedy now more than ever.
But as I read through the "10 steps” looking for new ideas, disappointment quickly set in, and the conclusion was that the list was a regurgitation of everything that has been proposed already, including a “financial transaction tax” and an “economic government.” So much for hope.
But while the pot simmers, and we truly don’t know how tasty the meal will be, we can drive the euro and stocks up and enjoy the quiet times while they last.