Questions, Questions, Questions:
The Finance Ministers gathering in Brussels are surrounded by uncertainty. What about Greece? When will the new government take over?
Luxembourg Prime Minister Jean-Caude Juncker, chair of the meeting, told reporters he was hopeful about the Greek situation, "I expect that the new government will make clear very soon that what was decided on Oct. 26 and Oct. 27 here in Brussels will be adopted down to the last detail."
But what is the last detail, Monsieur Juncker? The meeting of Oct 26th and 27th did no more than create a template for bailing-out Greece. The fine print of precisely how banks would take their 50 percent hair cut on the Greek bonds they hold was not clearly defined. What is the time frame for implementation of the agreement? Does the Greek government need to make more cuts before the debt forgiveness? Or even getting its next tranche of bail-out money?
Wolfgang Schaueble, Germany's Finance Minister said as he walked into the meeting, "Every day a new situation,” Schaüble said. “The program's conditions must be met before we can decide about the payment of the tranche.”
It's clear that a lot of details were left to the future in that agreement of Oct. 26th and 27th.
Sure, leveraging the EFSF so that it can bail-out Italy, or any other euro zone nation, which can't meet its bond repayment obligations, is a good idea but one that relied too heavily on the IMF or China's willingness to help fund its set-up. IMF chief Christine LaGarde explained at last week's G-20 summit that the IMF's charter only allows it to lend to governments, not institutions. Is the EFSF a government? Is the euro zone a government? Didn't any of the incredibly well-educated and well-paid advisers who actually work through the policies for governments realize that the IMF couldn't possibly step in and participate in bolstering the fund?
As for China - steady governance is clearly a culturally prized asset for the Chinese, does anyone think that Italy looks like a well-governed country so long as Silvio Berlusconi is Prime Minister?
And he is making announcements about his future today on Facebook!!! Maybe he should try Baidu.
It would be funny if Italian bond yields were not approaching their highest level since the euro was created and if stock markets across the continent were not falling.
The questions hovering around the finance ministers cannot be adequately dealt with until the big question in Europe is answered, when will Berlusconi go?