December 14th, 2011
04:26 PM GMT
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London (CNN) – The latest developments in the euro crisis are just like the holiday parties we go to at this time of the year. We make merry, binge - and then suffer horrible hangovers in the days after. It hasn’t taken long for the euro-hangover to arrive. The bonhomie of the euro-deal has evaporated.

I decided to wait a few days before writing about the agreement in Brussels. It is easy to succumb to the enthusiasm of a late-night deal, believing that it will bring “peace in our time” and a “chicken in every pot.” To hear the EZ17+ leaders on Friday it was surely just a matter of dotting the Is and crossing the Ts. Only with the reflection of a few days can you see what works, what doesn’t - and who will change their mind.

Rise and fall of euro

The “fiscal compact”was a fine piece of German-French engineering, in the best traditions of euro-fudge. It establishes the “fiscal rule” requiring balanced budgets for all signatories to the new treaty, followed by automatic sanctions for those that fall foul.

In any event, it offered up vast new powers to the European Commission and European institutions but didn’t address the safeguards of countries like Ireland who might need referenda to approve them. It left so much to be negotiated between now and March that it is not surprising the Czech Prime Minister Petr Necas now describes it as a blank piece of paper.

Jargon buster

The biggest objection I have to this new treaty is that it assumes deficits are a bad thing. There is no flexibility to run general deficits and yet, as the past three years has shown, flexibility in policymaking is crucial.

The ability for the U.S. to have the Troubled Asset Relief Program, a stimulus package and ultra low monetary policy all played roles in ensuring a recession didn’t become a depression. The UK introduced quantitative easing, or QE, and then QE2, while the government runs a deficit of 9%. And still the economy is sluggish to the point of recession. Imagine if they had been shackled with the nonsense of this agreement.

Ultimately, this may not matter because European countries have shown a remarkable ability to do what they want, when they want it. Everyone is conveniently forgetting the fact Europe had a previous strict regime on deficits: The Maastricht criteria, which became part of the Stability and Growth Pact. Nations were supposed to have deficits of 3% or less. Except Germany and France both bludgeoned the others into suspending the pact in 2005, when the going got tough.

Europe's debt map

In other words, they changed the rules. They did it before and the results are plain to see. They can do it again. Party now while the time lasts. There are many more hangovers to come.



soundoff (41 Responses)
  1. Steve Thompson

    From its inception, Europe had in place measures that were supposed to ensure fiscal responsibility by limiting deficits and debt increases as shown here:

    http://viableopposition.blogspot.com/2011/12/where-did-europe-go-wrong.html

    Unfortunately, Europe is not a union of economic or fiscal equals, a fact that will likely be the cause of the potential Eurozone collapse.

    December 14, 2011 at 4:46 pm |
  2. Derek

    The only two faces we see in articles about the EU are Merkel and her French lap dog. Perhaps they should merge and find another way to take over Europe...say, maybe in another 70 years?

    December 14, 2011 at 5:41 pm |
  3. Hemos

    The Euro is the best thing that happened for Europe in centuries! Allowing me to travel freely without changing currencies every time i travel for business(which is a lot), holidays or shopping. No exchange fees.
    Any problems with it will be dealt with on a step by step basis.

    Any attacks by these especially US media channels are temporary. When the Dollar was falling for the past 8 years we so almost Zero articles about the decline of the Dollar on CNN. Clearly not a coincidence. CNN is a US media channel. Looking out for US interests. They are always reporting from a US perspective or interviewing people from a US perspective. This makes them fundamentally biased. So their "news" should always be taken with a cup of salt. Hence their massive amounts of reports when the Euro goes lower while almost nothing about it when the Dollar goes lower. That`s not balanced news people.

    And as you have seen, The French, Germans, Dutch and every Euro government will not allow the Euro to fail. Not only because it costs far, FAR more to go back to the old days. But also because it provides a Common Peaceful future that extreme nationalism could NEVER achieve. The leaders of Europe know this very well. So they are committed to go all the way to advance a common European future. Britain has always been the outsider since it`s on an Island and not of mainland Europe. As Merkel, Sarkozy van Rompuy etc indicate, Europe will take it step by step to improve all fundamentals. It will take time but they are committed to do what is takes.

    December 14, 2011 at 5:52 pm |
  4. Roko

    No structural changes in European Union, translated, Britain was not kicked out from EU, so without that, EU cannot advance at all until countries like UK are inside and not outside.

    December 14, 2011 at 6:07 pm |
  5. Warren Wolf

    no wonder: look at these guys: a physicist, a lawyer and an anarchist..WE need real leaders in Europe to avoid another epic disaster! Who are the leaders in Europe??

    December 14, 2011 at 6:12 pm |
  6. Roko

    Also one advice to CNN, get yourself decent Europeans TV studio in Paris and Berlin, with bunch of the European and non British reporters if you want to give us good information from Europe.

    December 14, 2011 at 6:14 pm |
  7. Warren Wolf

    ..and look at their faces. They shall be replaced ASAP!

    December 14, 2011 at 6:14 pm |
  8. Aitsch

    A Hangover? Nonsense of agreement?
    Lucky CNN seems to be alone with this meaning. Germany and Italy had no problems selling bonds today. Germany only pay 0.29% for 2 years bonds (last time 0.39%) and still they have been oversubscribed by 40% !!!

    The markets seem to have little doubt that Europe and the Euro will survive ....

    December 14, 2011 at 6:27 pm |
  9. Jean Deval

    (Rise and Fall of Euro as if it's done, over and that's it) Comments from Richard Quest reflect the average euro-skeptical English man, they are not un biased as they should be.
    Off with you Richard Quest.

    December 14, 2011 at 6:28 pm |
  10. EU 26-1

    The biggest threat for the EU and the EURO are the Anglo-Saxons countries, which are not informed and smart enought to understand that the EU economy is 10 times better than the insane indepted and nearby collapsing american and english economy, who spread everyday their anti-euro campaign with hudge energy into the world!

    December 14, 2011 at 6:53 pm |
  11. douglasjames

    It was a mistake from the beginning. This entire concept of trying to unify countries that fought for the rights to their borders, and trying like heck to preserve something that would resemble a union is a farce.
    The wars, the treaties, the various languages indigenous to each country automatically falls under the concept of failure.
    Shame on the United States for trying to put something together that had failure written from the beginning. It will never be a unified front, even for the staunch supporters, for the Germans will always be Germans, and the peoples of these countries want to maintain their traditions and culture.

    December 14, 2011 at 6:57 pm |
  12. David

    @EU 26-1
    I agree, it is truly a bad joke that the englishspoken countries, doing a lot more worse than the eurozone play the daily judges for the EU ratings and thei EU economies and demand for changes to their liking..

    Cant wait till the world eyes start to focus in their failed economies and start to bother them!

    December 14, 2011 at 7:07 pm |
  13. David

    @douglasjames
    It was no mistake, in like 5 years the EU will rock this planet! The EU allready is the biggest economy before the USA and CHINA in the world and they are now doing their homework, while the USA is doing just more debt..

    December 14, 2011 at 7:11 pm |
  14. hungover by CNN

    Richard Quest gives more of a hangover.

    December 14, 2011 at 7:16 pm |
  15. The Muppets Take Europe

    Is that Miss Piggy and Kermit?

    December 14, 2011 at 7:20 pm |
  16. john1

    It's nice to see how the so called leaders just laugh it up while a lot of people are paying the price of their mistakes.

    December 14, 2011 at 7:54 pm |
  17. Samuel

    Every Day CNN makes BlahBlah and the problem is that this Pro-USA based channel makes propaganda and i thought america is out of the age to make propaganda, is that really neccessary ? The propaganda works only for the people wich are not well informed or maybe not smart enough to understand the truth. The Euro Crisis do exist but there is absolute no Reason to be afraid, the Euro will not "doomed" or End, the only thing wich is right is that it will need years to solve the problems some countrys of course have got, nothing else, so better stop write wrong articles or make Anti-Euro-Propaganda, it will fail on the long distance.... you will see ! I have relatives in the United States wich are smart enough why so many others and CNN dont ?

    December 14, 2011 at 7:54 pm |
  18. Stephen

    @David
    Since in your previous comment you are getting at the English speaking nations, the Total GDP of the EU minus the UK is less than the US.

    December 14, 2011 at 8:04 pm |
  19. Arthur

    To Samuel's(above) commnets: Yes, CNN is Atlanta based but Richard Quest is as British as they come. This in fact is one of his spledid renditions of written english. A more caustic criticism would be to label him as another Englisman who bluntly anounces that "the Continent has been cut off from England". American he is not but certainly when he was with the BBC (do you remember back then) he was SO out of place – his frankness is refreshing. This comes to you from a fourth-generation-in-Nicaragua Englishman who has lived and worked on both sides of the Atlantic for many years.

    December 14, 2011 at 8:42 pm |
  20. Debt

    @Stephen, what about debt?

    US total debt $15 trillion,
    UK total debt is $9,3 trillion (60 mil population),

    France total debt is $3,9 trillion (60 mil population),
    Germany total debt is $4,9 trillion (85 mil population),

    December 14, 2011 at 8:44 pm |
  21. Debt

    Italy total debt is $2,1 trillion (60 mil population),

    December 14, 2011 at 8:45 pm |
  22. NoName

    Wait a second... tell me again how you justify using the phrase "fiscal hangover" in journalism? FISCAL H-A-N-G-O-V-E-R is used on a headline on CNN's homepage. You can't make this stuff up!

    December 14, 2011 at 8:45 pm |
  23. To No Name

    CNN's headlines are proof that CNN is the school of Journalism for Dummies.

    December 14, 2011 at 8:51 pm |
  24. Debt

    @Arthur, it is not important what you think from Nicaragua about CNN European studio in London. Main point is that for CNN in Europe is not just enough to return Christiana Amanpour back, but also that they invest money and employ French, German, Italian, Dutch and etc proffesionals who will be in CNN studios in Paris, Berlin and etc and he will inform us oN English language, but they will collect information all over Europe on local languages, so CNN information will be much better than it is now, because those Brits from CNN European studio in London, don't have idea what Europe think and how they function. Send Quest in Paris or Berlin to made some interview, he will need to ask first question "did you speak English". By many standards, US and Europe are much closer than Europe and US. For example most Europeans who speak English, they speak US English, British is too ugly for them. Second they drive on the same side like in US, in UK is opposite, theirs trains use totaly different system than in UK, except French Eurostar train who was designed to drive on both system and etc.

    When you are in London, than you are on lonely island which is pretty much different than continental Europe. When CNN create some article, than he give us British version or British view like European view, and that is just not right, European view is totaly different than British view.

    So point is if CNN want to be global media whi will have European TV studio, than they need to open few TV studios inside Europe, not on lonely and isolated Eurosceptic island, if not, they will create wrong picture about Europe, beside, if they don't want, Al Jazeera already moving on continent.

    December 14, 2011 at 8:57 pm |
  25. jose

    Of course Richard 9 % deficit is so cooool.
    I wonder what all your LatAm friends will be saying, since they were harassed by all you anglo business-experts during the 90s and early 00s due to high fiscal deficits... At that time you were not so understanding and it was you then who were preaching about the bonazas of tight budgets...
    Funny how all you zealots change just like that...

    December 14, 2011 at 8:59 pm |
  26. An American

    France and Germany are the only two leaders of the EU. They will lead the EU to succes.

    December 14, 2011 at 9:47 pm |
  27. Nuno

    "The ability for the U.S. to have the Troubled Asset Relief Program, a stimulus package and ultra low monetary policy all played roles in ensuring a recession didn’t become a depression."
    OH BOY OH BOY ! Questie my friend !
    I see you are one of those that thinks America is on the good way and that the worst is over !

    December 14, 2011 at 10:55 pm |
  28. george

    pretty funny animations on the euro on youtube.. type Euro cant sleep on youtube and youll see them :) starting with my favorite one hehe

    December 15, 2011 at 12:13 am |
  29. dmrd

    Debt, you seem obsessed by the UK. It really is embarassing. Mr Quest does not represent the view 'from London'. People in London (and Britain) have different views about the Euro. Although we are rather fond of democracy, and since we've never been consulted about whether we choose to be part of the Euro project or not in a referendum ha sa lot to do with the antipathy – British people on the whole don't particularly like being told to do by anybody, not least their own leaders, and certainly not from others in countries where we have had no say in who governs. But frankly, all of this is irrelevant to what is happening at the moment (just like the debt figures you quote – you don't seem to grasp the difference between public and private debt). Yes, German bonds are selling like hot cakes (likewise US / UK)... but the Italian ones aren't. Therein lies a problem with the Euro. The Brussells agreement reached the other day (whether Britain was involved or not) did little or nothing to convince the markets that Europe can solve the mess it is in. Forget the politics – pro-euro / anti-euro – it is a sideshow to economic forces and the real master, the market. The market will only be reassured when the ECB (by that, I mean Germany) agrees to underwrite any potential Euro losses. Unless/until that happens, investors will head for safe havens – and the Euro, whether you like it or not, is – in it's current form – only heading one way...

    December 15, 2011 at 12:20 am |
  30. jtmedina

    I am sick of the biased media coverage with British journalist trying to make it look like the Euro is dead. I can't understand why no one else can't see what they are doing.
    They are our worst enemy not the debt.

    December 15, 2011 at 3:48 am |
  31. m.s.mohamed ansari

    CNN WORLD report, in the war 6, 75,000 civilians killed, 7500 troops of USA and its allied forces killed 3 25 000 people wounded and $ 3.5 Trillion Dollar spent for the war. This spending of $ 3.5 Trillion Dollar is the main cause of action for the present economic crises prevailing all over the world.
    After winning the war against IRAQ, the United States of America’s President Mr. George W.Bush, also admitted the same fact, and he openly stated that the Intelligence agency misguided him

    December 15, 2011 at 7:50 am |
  32. m.s.mohamed ansari

    RUSH SAVE GLOBAL ECONOMIC TSUNAMI

    M.S.Mohamed Ansari 13 April 2009

    All press and Media Arabs leader and G20 leader at. Headquarters of All association
    CONGRESS. CONTROLL
    By. A TO Z + 8. QUEEN + 8
    Royal wedding. And royal security force 10 generation total cost $ 57 trillion
    Each every politician rolling 8 years only just like chess board Game
    But queen family enjoying 10 generation y

    GLOBAL ECONOMIC COLLAPSE REASON WAR. Improve Economy only 6 points. Peace, prayer
    Liberty, Unity, friendly And simplicity.

    I am also Happy to kill osma bin laden
    Turing point of global Economy. Islam not allowed to be Terrorist and Terrorist people are not a Muslim
    1. Please avoid war. Day by Day war cost increase $ 3.5 trillion
    2. Global economy and food price every Day increase
    3. International job less Y. All businessmen effected business.
    4. Global financial crisis every CNC manufacture. New technology energy product Effected FDI investors.
    5. Every Day OPEC Oil Price Increase
    6. World poverty problem. Bankrupt 170 Bank overalls 87000 Branch
    7. Each every single man Effected
    8. Ignore future Death million of already Death
    9. Million of People Wounded
    10. Global environment climate will be change this will lead Global Agriculture problem

    Copy.
    A. International criminal court. B. white house. global human right association .C.IMF
    D. euro union. E. united nation F.ALL international famous press and media

    JUSTICE IS IN PERIL. SAVIOUR OF INTERNATIONAL JUSTICE ALONE CAN PROTECT HUMANITY

    December 15, 2011 at 7:51 am |
  33. Muhammad Yasin

    actually europe crisis has caused million people don't have job or jobless and million people are frustated and disappointed also crazy because the leaders of europe follow US policy. europe has to be independent

    December 15, 2011 at 9:17 am |
  34. Pereira

    Here in Portugal, we Hate it, and brought us nothing but a BIG cut in salaries and a BIG increase in prices... Not to say that in Portugal we get 480€ for a month work... I really hope the Euro goes, and Merkel gets back to it's Bundestag... She is finishing the work of previous Germans that have not been able to do with bombs, what she does with a pen, and the French, again, surrendered to the Germans... But there is no Alliance this time... The Euro is doomed from the first day, or even before that... In Portugal people feel betrayed by our governors and the outside European also... England is making very very well to stand up for those two... I hope the Euro goes... boy i do... And i really don´t care about people that say Europe is good to travel with no currency exchange... I can't travel, i just want to work, eat and live with my children...

    December 15, 2011 at 10:27 am |
  35. Debt

    dmrd

    Debt, you seem obsessed by the UK. It really is embarassing. Mr Quest does not represent the view 'from London'. People in London (and Britain) have different views about the Euro. .... The market will only be reassured when the ECB (by that, I mean Germany) agrees to underwrite any potential Euro losses.
    ----------–
    Why you think something silly as that? Beside read British press, constant trashing of the Euro, France, Germany, EU and etc in last year? Just don't know what you guys doing in EU on first plaice? Let me clear something. British economy is in terrible shape, if they are inside Eurozone, they will be in the group called PIIGS, than we will call that group UKPIIGS. Check current British budget deficit, it is higher than Greeks, check household debt, check external debt, check inflation, what about Royal Bank of Scotland and Lloyd's debt? What about trade deficit in UK? They have him for decades, that is reason why they have $9,3 trillion external debt, which is 480% of British GDP. RBS and Lloyd's need again bailout from British government? Well, Mr. Quest don't see that? What about British exposure to Irish debt? On all that, UK have the smaller GDP than France.

    Market, former PM of France, Dominique de Villepin said good thing when he said for market today like "dictators of the market", so market will be happy if European Central Bank start to print Euro out of nothing, just like US Federal Reserve dollars or Bank of England Pounds? Are you sure that market will be happy, or British and US banks will be happy, because than they are able to continue to print theirs currencies out of the nothing? No my dear, so-called "Euro crises" is new "Swine Flu" case, just on "Euro-crises" pharmaceutical companies don't earn billions, but Wall Street and theirs puppets from UK trying to earn billions, even PIIGS inside Eurozone are better in many things than US or UK, but nobody write about US and UK crises? Why? Because they are hiding theirs negative picture behind Euro, and that is reason why we have here and on many other places where people speaks English, serials of the articles with trashing Euro and Europe? Europe still don't respond on this, but when they respond than we will have propaganda and economic war between Europe on one side, and Wall Street and theirs puppets from UK on another side, and that is not good. ECB will not print Euro out of the nothing and ECB will not inflate Euro like US Federal Reserve and Bank of England did with theirs currencies, and that is it. No, no, no!

    December 15, 2011 at 10:50 am |
  36. Amanda

    @Debt

    Why are you so bothered as to what Britain is doing? Yes we are in debt, just like most other nations, the fact that we don't want to continue paying for everyone else's and getting nothing in return just shows that for once those in charge are using some common sense.

    People are trashing the euro and Europe, mostly because two countries have taken it upon themselves to dictate what everyone else should do. I didn't vote for either of them, and will not have them tell me how much I should be paying to bail out the euro.

    December 15, 2011 at 11:33 am |
  37. Debt

    Amanda
    @Debt
    Why are you so bothered as to what Britain is doing?
    --------
    Replace that "you" with Anglo-Saxons, and replace that "Britain" with Eurozone from your question. What UK pay to EU and they don't get in return? That they are able to sell fighters airplanes to in debt Greeks, so after all French and German taxpayers will pay?

    My point, if UK don't like EU, no trashing, nothing, just leave and all British problems with EU will gone. Just do it, without any trashing, leave the EU, and everything will be "fine" with UK. Of course it wont happened, because UK is selfish, because UK use EU just to profit from that, so others like Germany and France, will risk everything and UK nothing, and they will have the same right inside that union. I think that was past, in future, all countries which made profit from EU market, will need to give something in return, or they will be kick out.

    How I remember before few days, 26 out of the 27 EU countries agree on something, and just one country was against, and that country is UK, like always. Like always they are blocking others to advance.

    Also if Cameron want to build from London rainy (Cayman) island offshore center, he is welcome to do that, just not with European money.

    December 15, 2011 at 11:48 am |
  38. dmrd

    Debt – you sound more and more fanatical with every message. I am British, and I am European, whether you like it or not. I am not, however, blinkered by Europe. And personally, I am not particularly interested in the idea of a federal Europe. Not because Britain thinks of itself a a big or especially important country (it isn't), but because it isn't interested in European empire – Brits want good trading relationships with Europe, US, China, Russia, Middle East, India, Africa and frankly anywhere else that wants to trade freely for the benefit of all. Unlike you I am not gloating that people in my country or elsewhere in the Eurozone are suffering in difficult economic times. The moment you start quoting GDP figures (my country is better than yours etc etc) it really does get very depressing... Who cares? Britain's GDP 10 years ago was much less than it is today, but I don't think people here are any happier, or that the quality of life is any better for it. Tell your GDP figures to your fellow Eurozone partners in Greece, Portugal, Ireland and Italy – I'm sure they'd love to hear about how rich Germany and France are! It doesn't matter to me at all. People in Britain are quite aware that if the Euro fails, Britain will be poorer (whether we are in the Eurozone or not). People in this country voted to be part of the European free market decades ago, but ultimately most people here arenot in favour of adopting the Euro – what is so bad (or anti-European) about that? It is called democracy. Perhaps your vision of Europe isn't the same?! Does that make you right and me wrong?! And Britain hasn't blocked anything in Europe. In fact, by the sounds of it, nothing much was really agreed in Brussells anyway – I suspect it will unravel in the next few months when politicians from the 26 take proposals to their parliaments and their people – but we shall see! Perhaps you'll be right and the Euro will continue in it's current form – I just won't be betting any of my pounds on it.

    December 15, 2011 at 7:37 pm |
  39. Euro Go!

    What about hangover in the U.S....?

    I vividly remember that ratings for the U.S.A. economy were downgraded after there was some painfully long days of debate in US congress... and nothing happened... At least, European politicians are trying to do something, and, step by step, are moving towards the right dircetion. By contrast, *nothing* is happening in the U.S.
    Not very surprisingly, those parts of the market controlled by Anglo-Saxons do not want to see that.

    December 15, 2011 at 7:41 pm |
  40. Anonymous

    BTW, since you, Uncle Tom of Uncle Sam, are one of THE GREATEST actors on this planet, you won't mind forfeiting your Nobel Peace Prize, will you? And as for drama, YOU take the cake, Uncle Tom...ooops...I meant to say, Mr. Presidente...
    How are your "friends" doin' this holiday??? Any more kow towing and back scratchin???

    December 18, 2011 at 12:09 am |

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