By John Galt
July 19, 2011
I think based on this story, the sense of urgency ignored by U.S. markets is not so much the case in the U.K. or based on Ambrose Evans-Pritchard’s latest missive a serious case of panic is beginning to spread across Euroland. Read more at the link at the headline from the U.K. Telegraph:
Europe’s leaders have finally run out of time. If they fail to agree on some form of debt pooling and shared fiscal destiny at Thursday’s emergency summit, they risk a full-fledged run on South Europe’s bond markets and a disorderly collapse of monetary union.
“We are heading towards fiscal union or break-up,” said David Bloom, currency chief at HSBC. “Talk is no longer enough as the fire threatens to leap over the firebreak into Spain and Italy.
“What the market is worried about is Germany’s long-term committment to the euro project. If we see unreserved and absolute backing from the political establishment of Germany, that will be a soothing balm.”
Chancellor Angela Merkel seemed in little hurry on Tuesday to convey such a message. There will be no “spectacular step” at the Justus Lipsius building on Thursday; just a “controlled process of gradual steps and measures”, she said with unflappable calm. Given the simmering wrath from top to bottom of German society, it may be impossible for her to do much more.