Reports are that European leaders are huddled in one big, nonstop, weekend-long emergency meeting, trying to figure how they’re going to squelch the panic that is growing in what at this point is starting to look very much like another frightening spike in the credit crisis that threatens to plunge the globe right back in the drink.
I’ll be honest with you, this is a time to choose words carefully. But honestly speaking, this is a crucial, critical point for the entire globe. If European leaders don’t undertake some massive action now, this very day, the Greek sovereign debt crisis risks unraveling the global financial infrastructure, which remains shaky. That sounds scary to put into writing, but I do believe that’s where we are. The Europeans may understand that, or they may not. You should hope they do.
“If this weekend only produces a reaffirmation of platitudes in this regard, next week will be very bad,” Simon Johnson writes at Baseline Scenario. “This is fiddling while cities burn.”
Alistiar Darling, the British finance chief, is flying to Brussels to meet with the EU’s 26 other finance ministers on Sunday, the Telegraph reports, as Britain has been “ordered” to participate in a plan to save the eurozone, even though it isn’t part of the eurozone, and even as the UK is currently effectively without a government, as they’re still trying to figure out who actually won this week’s election.
They’re calling it a “European stabilization mechanism,” and the fact that what was a regularly scheduled summit meeting Friday has turned into an all-weekend emergency meeting where they’re going to hammer together something shows at least that Europe’s leaders are starting to understand the very dire circumstances they are facing. But few details have emerged.
There has been a constant pattern to this crisis: the markets get worried, European leaders make some strong sounding comments, float an idea or two, the market backs off, there’s a rally, and some time later the fear trade picks right back up, only that much further down the spiral, because the leadership just wasted some of their precious credibility by talking without actually doing anything.