Think Euro Zone Peace Is at Hand? Think Again

Even as France and Germany were proposing new euro zone reforms, Finland was inking its own deal with Greece. Now others want in.

The idea behind the euro zone is cooperation and coordination - but you wouldn't know it from the latest maneuvering around the second European bailout plan. Finland, long uneasy with supplying major aid to ailing peripheral countries, got Greece to agree to put up collateral in exchange for a bailout loan.

Not surprisingly, other countries now want some too. Austria, Slovenia, Slovakia and the Netherlands today demanded similar insurance from Greece - which would force that country to spend scarce money on collateral rather than on getting its house in order. All these demands, meanwhile, are interfering with any headway on the euro zone bailout deal reached in July.

"This is certainly not a good omen for the reforms that are on the table," says George Davis, chief FX technical analyst at RBC Capital Markets. "The risk has now increased that other countries who do not receive collateral may not vote in favor of the loan bailout - which would derail the entire process and once again call into question the viability of the euro zone," he told me.

The euro, meanwhile, is lower against the dollar - partly on grim U.S. economic data and partly on concerns about the new demands.

With 17 countries and their various finance ministers, central banks, and Parliaments, you didn't really think a bailout would be easy, did you?

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