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Kate Farmer

Cutting to the chase

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Erstellt am: 11. 9. 2012 - 14:07 Uhr

Another day, another Euro crisis

Reality Check: Euro crisis, Hungary brain drain, Dutch elections, Erste Foundation Social Integration Award, the round the world solar cyclist.

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Many people must have been hoping that the Euro crisis would evaporate over the summer break. I know I was. Of course, it never really went away. There were distant rumblings of ratings agencies downgrading one country or another every few weeks - but the urgency somehow went out of it all. Those "very last chance" meetings that came and went without anything decisive coming out of them dropped dramatically in their frequency as ministers took their summer breaks, and now we seem to be returning to business as usual.

Did I say "business as usual"? Well, not quite. I'm sure everyone will be very pleased to know that while we were all enjoying the sunshine, the President of the European Central Bank, Mario Draghi, was slaving away, coming up with a "fully effective backstop" to make the whole dreadful mess go away.

Did I say "make the whole dreadful mess go away"? Well, not quite. The idea is that the ECB will buy treasury bonds from the countries currently paying very high rates of interest to the banks, so cutting the interest the country has to pay. In Spain, for example, interest rates could be cut from 6.5% to 2.5% overnight. But, of course, there's a snag. For one thing, that money from the ECB has strings attached, which are not acceptable to Spain, for one. Do you get a feeling of deja vu? Weren't we here with Greece several months ago?

For another, the money has to come from somewhere, and Germany is currently waiting to find out whether it's backing of 27% of the EU bailout fund is actually constitiutionally legal. If the court rules that it isn't, well, who knows what will happen next? Quite possibly the same as has beeen happening for the last 3 years. Nothing. Perhaps it is business as usual, after all.

Johannes Pollak ot the Institute for Advanced Studies says that the urgency of the matter depends on where you're sitting, but what we really need is an open, democratic process - not more meetings and plans that look good in theory, but fall apart in practice.