Time to Throw in Towel on Euro Crisis: Economist
Having spent two and a half years following the euro zone debt crisis, one economist has decided to throw in the towel because he says EU leaders have failed to prevent Italy from losing access to the funding markets.
EU governments have "failed to stabilize every challenge they have been given so far in the crisis,” wrote Carl Weinberg the founder of High Frequency Economics on Tuesday as European finance ministers met in Brussels.
“What Eurolandneeds is a king to knock together heads of all the princes of all the provinces, or rather nation states, to do the right thing for the kingdom. No King is apparent, so no hope of an orderly end to this mess is likely," Weinberg said.
According to him, the euro zone’s third-largest economy’s fate is now in the hands of speculators after 10-year Italian bond yieldsrose to 6.11 percent on Monday. “This is severely disappointing for a zone whose aggregate finances are not in bad shape at all,” Weinberg said.
“The problem is the inability of the political systems to redistribute financial resources and fiscal acumen" among euro zone nations, Weinberg wrote, adding he can no longer believe the political status quo will ever allow for a lasting solution to the crisis facing Europe.
As EU finance ministers discuss speeding up financial support for Spain’s banks, Weinberg claims banks across the euro zone remain in big trouble.
“All the banks in Greece, pretty much, are insolvent.”
“Italy’s banks have problems too as Monti dei Paschi di Sienna’s call for help last week demonstrated. Italian banks are next to come under the gun. Yet Euroland funds to support Italy have yet to be raised,” said Weinberg, who is worried that a lack of transparency by the European Banking Associationmeans no one knows which banks are sound.
“We are ready to throw in the towel. No one can believe that no bank in Euroland will fail.”
By CNBC EMEA Head of News, Patrick Allen