EU Member Nations to Sacrifice Sovereignty?

They may find it difficult not to:

Euro crisis: It's still not over

[...] Banking union: European Union leaders are expected to discuss plans to form a banking union in Europe when they hold a summit June 28-29.

The EU proposal would include a single deposit guarantee organization covering all banks in the union, something similar to the FDIC in the U.S..

There would also be a common authority and a common fund that would deal with bailouts needed for the cross-border banks that are major players in the European banking system.

In addition, there would be a single EU supervisor with ultimate decision-making powers for the major banks, and a common set of banking rules.

The move would represent a step towards greater centralization of European authority. But it remains to be seen if all 17 eurozone governments will agree to sacrifice sovereignty for the sake of the union. [...]

I've posted previously that those who've created this crisis are now using it to consolidate their power. Sure looks like it.

The article also mentions that France as well as Greece, are having elections on June 17th, which are expected to move both further left politically, probably in the hopes of avoiding austerity measures. I suspect that further consolidation of the EU will then be offered as the only possible solution. We shall see.
     

Euro Crisis an excuse for consolidation of power?

A Greece euro exit could make Lehman's collapse 'look like a tea party'

London (CNN) -- The wheels are coming off the wagon. The fat lady is about to sing. The proverbial is about to hit the fan. It doesn't matter which saying you use, the facts are inescapable. Greece's membership of the eurozone is untenable under the current conditions and everyone knows it. Some like Hungary's finance minister say openly Greece will leave the euro. The only question is what catalyst will force it out and when. The nearest deadline to hand is the country's June 17th elections, when the Greek voters will decide whether to support parties who will adhere to the bailout agreements or those who want to tear them up.

[...]

Obviously now everyone has Spain in their sights. And there is where the real problem lies. Spain is too big to fully bail out a la Greece and definitely too big too fail. If Spain gets into too much trouble "Project Euro" is likely over. From all my private talks with European officials it has become clear -- Spain is the line in the sand. Greece may be too far gone and be allowed to fall, but Spain will be defended till the bitter end. So I fully expect European leaders to give Spain something to take the boot off the throat of austerity in the coming weeks. Probably the same for Portugal.

European officials have made mistakes in their dealings with Greece. The austerity measures were too harsh. They shouldn't have been nearly so brutal, and that lesson has been learnt. Now with the election of Francois Hollande as France's new president everyone can change course slightly and pretend they meant to do it all along (they didn't). Expect a growth pact to be agreed between Germany and France to sit alongside the main Fiscal Compact, which Germany will not allow to be re-opened.

I could speculate for hours about which solution will be found, what formula they will adopt to keep the whole thing moving -- and frankly, it would be useless. This crisis is now moving too fast and has taken on a life of its own. The firewall is starting to smolder. The austerity plans are starting to fray. The European Central Bank is cutting loose several Greek banks it does not consider solvent. The eurozone is all but back in recession. There are some uncontrollable aspects (the Greek voters for instance) which make forecasting the future direction just about impossible.

I still believe that the single currency will survive in some shape and form. I just cannot see the eurozone surviving in its present form -- not without the most drastic re-organization towards fiscal union, a federation of states with a central bank and treasury. [...]

The crisis they themselves created, becomes the excuse to tighten their grip and consolidate their power.
     

Will Greece, Italy and other PIIGS sink the Euro?

For my fishtank, I got one of those Greco-Roman Ruins backgrounds. I thought perhaps, to make it contemporary, all I needed to do was add a Euro ATM machine:


It would be ironic if Greece and Italy, from which the principles of Western Civilization sprang, turn out to be also the springboard for it's collapse and ruin.

Is it really that bad? I can't say for sure. But it does look alarming, as the Europeans seem unable to contain the problem:

Spain and France: Market says you're next!

NEW YORK (CNNMoney) -- Next up on the 2011 Europe Financial Calamity tour? Spain and France.

Yes, government bond yields in Italy are still climbing -- even after the resignation of Silvio Berlusconi. With the Italian 10-year back above 7%, it's clear that investors are still very nervous about the debt problems in Europe's boot.

But perhaps more alarming is the fact that the market is now increasingly wary of Italy's Mediterranean neighbors as well.

Yields on Spain's 10-year bond have climbed to about 6.3%. That's dangerously close to the 7% level that many investors feel could signal the need for a Spanish bailout.

And France's bonds are starting to look like French toast. With yields now around 3.67%, that puts the "pain" in pain perdu. (Yes, I watch Top Chef.)

[...]

The verdict from the experts I spoke to: Unless the European Central Bank steps up to the plate with a real plan to stop the bleeding, Europe will keep bleeding.

"The market keeps looking ahead to the next potential victim in Europe," said Jurgen Odenius, chief economist for Prudential Fixed Income in Newark, N.J. "Volatility is rising because there is no comprehensive, credible solution. It's becoming readily apparent that there's only one game in town, an ECB rescue."

Europe: New leaders, same debt crisis

Odenius said he doubts that Europe will be able to convince China and other global sovereign wealth funds to put up enough capital to increase the leverage of the European Financial Stability Facility bailout fund. That means the ECB may have to be the proverbial lender of last resort.

If the ECB does not take more bold action -- namely a strong commitment to keep buying more sovereign debt -- Odenius thinks Spanish yields may soon hit 7% like in Italy. And if that happens, France could also be in serious trouble.

"The French have problems in their banking system related to Italy, Spain and other countries. Investors are not suggesting that France is a crisis just yet, but it is murky," he said.

Michelle Gibley, senior market analyst with the Schwab Center for Financial Research in Denver, agreed. European leaders need to bust out a "bazooka" to deal with the debt crisis, she said.

[...]

But the problem facing Europe right now is that leaders haven't even acknowledged they have a big financial weapon, let alone talk about a willingness to use it.

"I am concerned that European policy makers have yet to find the bazooka," Gibley said. "The crisis is rolling from one nation to the next. The contagion has not been contained."

Eurozone teeters on edge of recession

Her biggest worry is that European governments are simply choosing to focus on austerity to deal with their fiscal problems. But while budget cuts, higher taxes and more responsible spending can help cut onerous debt loads, such actions do nothing to help stimulate their economies.

"The debt crisis is now potentially entering a dangerous cycle where austerity just reduces growth, borrowing costs continue to rise and credit ratings get downgraded. That's because nobody is addressing growth," Gibley said. "How much more turmoil does there need to be before the ECB does more?" [...]

But how much more CAN they do? Can they stimulate economic growth, sufficient enough to stay on top of their debt payments? If they don't have a bazooka, will they get one in time?

It all remains to be seen. Hopefully not on a fish tank backdrop.


Also see:

Why Greece is in trouble. And a warning for us.
     

Beggars can't be choosers. Or CAN they?

Greece to hold referendum on Europe debt deal

[...] "This referendum will be a supreme act of democracy and of patriotism," Papandreou said, apparently catching many lawmakers by surprise. "The [Greek] citizen will be called upon to say a big 'yes' or 'no' to the new loan arrangement."

But asking voters to support harsh austerity measures that were part of a painstakingly crafted bargain with Greece's creditors casts uncertainty over the country's ability to meet its part of the deal.

Greece is facing the possibility of a devastating default that could imperil the fate of Europe's single currency, shatter global markets and get the country evicted from the 17-nation Eurozone.

[...]

Angelos Tolkas, a government spokesman, said details involving a referendum were under review. It would be the first such public ballot in Greece since 1974, when voters decided to abolish the monarchy after a brutal military dictatorship.

"It will most likely take place in January and it will be binding," Tolkas said.

[...]

A poll published in the To Vima weekly newspaper over the weekend showed 6 in 10 Greeks opposing last week's rescue deal, many fearing more cutbacks in wages and jobs. Still, 54.2% supported the idea of a referendum, while 40% believed Parliament should decide whether the deal makes sense for Greece.

Whispers about a referendum had been heard for weeks. Still, Papandreou surprised opposition rivals, and even some of his aides.

Members of the Communist Party referred to the move as blackmail. Rival conservatives said Papandreou was dangerous, with New Democracy party spokesman Yannis Michelakis saying that instead of "withdrawing honorably, [Papandreou] dynamites everything."

Senior government officials said Papandreou could push the agreement through Parliament should the public knock down the debt deal in the referendum.

Whatever the contingency plan, Christopher Pissarides, a Nobel economics laureate, told Sky News, "a rejection [of the European deal] will be disastrous."

"Greece will default immediately," Pissarides said, "and I can't see them staying in the euro having rejected such a vital EU plan."

So if they decide having half of their debt eliminated isn't good enough, they will take the global economy down with them? I thought kicking them out of the EU was not an option?

Pure democracies always destroy themselves. Is that what we are going to see here? The Greek president using his "dynamite" and going out with a bang? And taking the global economy with him?

I guess we'll see in January, won't we?


Also see:

Why Greece is in trouble. And a warning for us.

     

Greece has an 81 percent chance of defaulting?

Those don't sound like good odds:

Euro zone warns Greeks on sovereignty and privatization

BRUSSELS/BERLIN (Reuters) - Euro zone finance ministers have approved a 12 billion euro ($17.4 billion) installment of Greece's bailout, but signaled that the nation must expect significant losses of sovereignty and jobs.

Ministers in the Eurogroup gave the go-ahead for the fifth tranche of Greece's 110-billion-euro financial rescue agreed last year, and said details of a second aid package for Athens would be finalized by mid-September.

But within hours of Saturday's decision, Eurogroup chairman Jean-Claude Juncker warned Greeks that help from the EU and International Monetary Fund would have unpleasant consequences.

"The sovereignty of Greece will be massively limited," he told Germany's Focus magazine in the interview released on Sunday, adding that teams of experts from around the euro zone would be heading to Athens.

"One cannot be allowed to insult the Greeks. But one has to help them. They have said they are ready to accept expertise from the euro zone," Juncker said.

Greeks are acutely sensitive to any infringement of their sovereignty and any suggestion that foreign "commissars" might become involved in running the country is an incendiary political issue and could trigger more street protests.

[...]

Juncker also said Greece must privatize on a scale similar to the sell off of East German firms in the 1990s.

"For the forthcoming wave of privatizations they will need, for example, a solution based on a model of Germany's 'Treuhand agency'," Juncker said, referring to the privatization agency that sold off 14,000 East German firms between 1990 and 1994.

[...]

Financial markets still see an 81 percent chance that Greece will eventually default, and German Finance Minister Wolfgang Schaeuble told Der Spiegel in an interview that Berlin was making preparations for such an event -- even though it does not expect it to happen.

Private financial institutions have held talks with finance ministry and central bank officials in euro zone countries to discuss under what conditions the private sector would be willing to help finance Greece and by how much.

Those discussions continue, with the involvement of the private sector in the next package a must for several euro zone countries as voters grow increasingly opposed to shouldering the burden of bailing out Greece on their own.

But private sector involvement must be voluntary to avoid triggering another downgrade of Greek debt to default status by ratings agencies, a development which could put the whole Greek banking sector at risk. [...]

It sounds like they (the EU) knows that what they are doing is going to fail, and they are hoping that the private sector will somehow bail them out of the mess government has made? How much sense does that make? And as for their comparison to East Germany's Treuhand selloff... well. Read the whole thing. It doesn't sound promising at all.

Meanwhile, back home:

Debt ceiling: Why Sunday could be make-or-break day for 'grand bargain'

I hope they do reach a grand bargin. I have no doubt that it won't be perfect, and that it will be criticized from both sides (as compromises usually are). But compromise IS the nature of politics in a democratic republic. An even though the "bargain" will be imperfect, I think it will be better than the continuing doubt and uncertainty being created by the ongoing lack of a budget, and lack of a plan to deal with the deficit. It's dangerous; we are teetering on the edge of an abyss. And the fact that it has been allowed to go on this long, is shocking. Tragic and shocking.

     

The cure for Greece is the one for US too

America faces a big, fat Greek-style bankruptcy

[...] Greece's problem is Europe's problem ... and following closely behind, America's problem, too. We're all Greeks now. Quite simply, Greece's problem starts and ends with government employee unions. There are too many government employees (one of every three Greek citizens works for government); their salaries are way too high; their bonuses can be described only as insane (2 months for each public employee); their pensions are ridiculous (retirement far too young and free health care for life); and their government jobs are guaranteed for life.

Sounds crazy, right? Sounds like in Greece the inmates must be running the asylum. Except America has the exact same problem. California, New York, New Jersey and Illinois are our very own homegrown versions of Greece. These states are bankrupt, insolvent and desperately need a bailout. Why? For the same reasons as Greece. Far too many government employees; bloated salaries for civil servants; bonuses and raises are contractually obligated even during an economic crisis; sky high pensions; and jobs guaranteed for life. The only difference is that we are a nation of 300 million, so the debt is far bigger than Greece. It turns out that we are Greece squared.

The solution to save America from economic Armageddon? Simple. Use the same "austerity measures" imposed upon Greece, in return for this $145 billion loan, to dramatically cut spending on government employees:

-- Freeze government hiring for the next three years.

-- Eliminate bonuses and raises for the foreseeable future.

-- Institute layoffs and across the board wage cuts. Why should government employees enjoy "privileged status" that no employee in the private sector enjoys?

-- Change pensions from "defined benefit" to "defined contribution" pension plans, meaning retirees receive only what has been built up in their 401K type retirement accounts.

-- Raise the retirement age. In Greece it is going from age 53 to 67. Gold-plated pension plans are the single biggest factor that bankrupted Greece. The same problem bankrupted U.S. automakers GM and Chrysler.

-- Require government employees to pay more of their health care (through co-pays and deductibles).

-- Change the way pensions are calculated by eliminating overtime and raises in the last years of employment to "game the system."

The real global threat to our existence isn't global warming -- it's catastrophic government spending and, more specifically, spending on government employees. Our government's unfunded liabilities are now estimated at $60 trillion to $75 trillion over the coming decades. To give you some perspective, the New York Post recently reported that one New York firefighter is retiring on a pension of $240,000 per year. If he lives 40 years beyond retirement, that will cost the taxpayers almost $10 million. That's for one single government employee.

There are millions of them on the federal, state and local level. It can only be described as a ticking time bomb that threatens to destroy our children's and grandchildren's future.

Nevada's economic future is clouded by this same crisis.

Government employees should be cheering the solutions I have laid out above. [...]

Yes, they should, and the author goes on to explain why. The way things are, government employees are risking losing it all. But the unions are doing every thing they can to block any changes to make pensions sustainable. Excessive Union greed can kill the host, the goose that lays the golden eggs, the prosperity engine that pays the bills, leaving us all poorer.

I know that unions are not going to disappear, but there must be balance. Their relationship to their employer needs to be symbiotic, not parasitic. In the private sector that concept is sometimes understood, by unions that understand enlightened self-interest; they know that their employer needs to thrive, so that the union can also thrive and survive. But in the government sector, that concept doesn't even exist. It's a parasitic relationship that's completely out of control. And the taxpayers are the host that's being attacked. We need the cure, for ALL our sakes!

I wanted to print this entire article, it explains the causes perfectly and has the answers too. It's worth reading the whole thing.
     

Why Greece is in trouble. And a warning for us.

From Neal Boortz:
BECOMING GREECE

Some of you may think that I am being dramatic when I say that images of Greece may soon become a reality in America, if we continue down our current path. Yeah ... that's me. Mr. Drama. There are two main issues that led to the downfall of Greece. First, the government took on too much debt, which means the Greek government spends too much money. While our own government debt is alarming - and growing at record rates with The Community Organizer in charge. We're in a financial crisis right now - not as bad as Greece, but bad enough - but it wasn't caused so much by government debt as it was by government ineptness. It was private debt that sent us into a tailspin. Specifically, trillions of dollars owed on real estate loans by people who didn't have and never had much of a chance of paying those loans off. Our government debt problem can still be solved - but not with this man in the White House and these big-spenders controlling the congress.

What is going to be a lot harder to solve is the second issue that led to Greece's downfall: an entitlement culture. Greece is a country that has managed to convince its people that they need the government in order to survive. Not only do they need the government but they are ENTITLED to certain things, and like any good entitlement culture, that list of "things" only grows and grows. Suddenly, the people of Greece believe that they are owed a comfortable life by their government, even if they are not willing to work for it.

In Greece the average government worker retires at 58 years-of-age with 80% of their final basic salary. The Greek government can't even tell you how many government employees there are. Some estimate that figure to be one out of three Greek workers. Unions run the show and the government marches to the demands of union leaders. In this regard Greek government officials are much like our own. Unlike the private sector, when government officials are met with unreasonable union demands for wages and job security they don't have to crunch the numbers to see if the demands can be met with any degree of fiscal responsibility. After all .. they can just raise taxes. You start weighing the effect of unions working against your reelection to the mindless voters remembering a tax increase a year later when they go to the polls and ... well, it's not hard to figure out.

Over the years, Greek salaries and pensions have risen 30% above Greek productivity ... in other words, they were getting paid more than they were worth. Not only that, but they felt ENTITLED to this payment and only sought to gain more and more while doing less and less. We are talking about a culture where being a hairdresser is considered a "hazardous job" ... a hazardous job that makes you eligible to retire with a full pension (funded by the government) at the age of 50. But it's not just hairdressers, there are 580 other job categories that have managed to convince the government that there job is so hazardous that they are worthy of an early retirement - 50 for women and 55 for men. Radio and TV presenters - I guess that would include yours truly - can take early retirement because they are thought to be at risk from bacteria on their microphones. Musicians who play wind instruments .. they can retire at age 50 because they have to deal with gastric reflux from all the puffing and blowing.

No, I am not making this stuff up. This is what happens when you have a country that believes they are owed everything and a government that is willing to give it to them because that gives them (the politicians) more power. In the meantime, paying for this mentality mattered not ... until now.

Are we now watching the final chapter in Greece? The EU and the IMF are ready to bail out Greece with over $150 billion dollars, but there are strings. Wages are going to have to be cut. Government employees are going to lose jobs ... and, as you can see if you peel your eyes away from Inside Edition this evening ... the Greeks don't like it. They're rioting. They're attacking their own police officers. They're destroying property. Greece is virtually paralyzed by violence .. people reacting to the reality that their cushy ride might be coming to an end. You're seeing what happens when a parasite is separated from the host ... when the protected and coddled face the prospect of having to develop a bit of self-reliance.

Could this happen in America? Can someone please tell me why it could not?

The situation in Greece has become unsustainable. Government unions are the biggest culprit.

Unions thrive only when they have a healthy host to feed off of. But too often they see their host as an enemy to be destroyed. If they succeed in weakening or destroying their host, they also weaken and destroy themselves.

Some Unions in the private sector understand this, and work with their capitalist host to ensure the company remains profitable; the relationship is more symbiotic than parasitic. Ford Motor Company comes to mind. They are unionized, but didn't need a bail-out like GM. Ford and the Union maintained a balance, so they could both survive and prosper.

Such enlightened self-interest is not practiced by government unions, which tend to see their host as having unlimited deep pockets. When permitted to grow unchecked, the Greece Crisis is the inevitable result.

As the unionized portion of our own government continues to grow rapidly under the current administration, we would be wise to learn from the mistakes of Greece, so as not to repeat them.


Also see: Beware of Greeks bearing Red Flags

     

Beware of Greeks bearing Red Flags

Greeks protest austerity cuts at May Day rally

Athens, Greece (CNN) -- Greek protesters clashed with police who fired tear gas during the annual May Day rally on Saturday in Athens, where thousands of people gathering for the event seethed over government belt-tightening plans to deal with the country's debt problems.

Waving red flags, the crowd at times surged toward the line of police, who wore helmets and carried riot shields. The police pushed them back each time.

[...]

About 12,000 people were protesting in Athens, and rallies were also taking place in the northern city of Thessaloniki, the spokesman said. Protesters there smashed two ATMs, the glass frontage of a bank, and a car, but no one was arrested or being questioned, the spokesman said.

The annual May Day rally has taken on an angry tone this year as the Greek government prepares to enact austerity measures to cap its large deficit and massive debt.

The package of measures was expected to be revealed Sunday. It is likely to include cuts in civil servants' salaries, pay freezes, reductions in pension payments, changes to tax rates, and increases in the value-added tax consumers pay on purchases, Ilias Iliopoulos, the general secretary of the public sector union ADEDY said Thursday.

The International Monetary Fund and the European Union are discussing a bailout for Greece, whose economic problems threaten the stability of the common European currency, the euro.

The amount of the aid package being negotiated was not clear, but the IMF and EU are likely to demand the austerity measures as a price for a bailout.

Greece's national debt of 300 billion euros ($394 billion) is bigger than the country's economy, and some estimates predict it will reach 120 percent of gross domestic product in 2010. [...]

It seems like everyone is wanting someone else to bail them out, instead of learning to live within their means. We will be looking at similar "austerity measures" here in the USA, if we keep pursuing the course of unsustainable spending and borrowing. Follow the link for more info, photos and video.


Here are some photo's from their other protests over the last few years:



It's no accident that the "flag poles" are so sturdy; they double as weapons:



But the Reds also use petrol bombs too:



I can see why the German's don't want to bail Greece out. Do it for them once, and they would then expect it, again and again, endlessly. The Red Flag folks would demand it.


Also see:

Greece bailout drama: It's only just begun

Let Greece Have Its Default
     

Greece bailout drama: It's only just begun

Apparently, the problem has not been solved, only delayed. Ultimately, it looks like many of the EU countries are looking to one country to bail them all out: Germany.

The Euro Project’s Knockout Flaw

The European Union (EU) has temporarily solved the crisis involving the euro, the EU’s common currency, by bailing out Greece. Temporarily, because no one believes the problems are over.

Greece, teetering on the brink of bankruptcy, is one of the 16 countries which use the common currency. To stop its financial problems from dragging the euro down, the 15 other eurozone countries worked out a €45bn emergency funding plan. They declared that they were prepared, together with the IMF (which is to guarantee a third of the sum), to give Greece a €30bn credit line if interest rates become too high for Athens to borrow the necessary funds on the financial markets. In return, Greece has promised to cut its budget by 10% of its GDP in the next three years. The deal has temporarily restored the markets’ confidence in the euro.

There are at least three reasons for skepticism.

First, it is simply impossible for Greece to cut its budget by 10% of its GDP in three years without having the option of devaluating its currency to make its products cheaper on the international markets. The Economist argues that the €45bn rescue plan has “merely bought time – three years, in effect, to contain the adverse consequences of a possible Greek default.” The magazine states, moreover, that Greece is in need of a rescue plan closer to €75bn.

Second, Greece is not the only eurozone country facing default. The budgetary situation in the other PIGS (Portugal, Italy, Greece, Spain) and Ireland is equally precarious; that in France and Belgium is not much better. How are countries which might soon need help themselves, expected to help Greece? The blind cannot lead the blind. The main reason why France and Belgium agreed to help Greece is because they count on receiving help themselves when in need. Everyone, however, is expecting help from the same country: Germany.

[...]

Third and most important, however, is the basic flaw of the euro project. It is economically flawed because it is politically flawed, and it politically flawed because, as the Dutch professor Jaap Koelewijn pointed out, it is culturally flawed. The euro is doomed to fall because of insuperable cultural differences.

[...]

In the southern countries, governments are characterized by a higher degree of corruption, which is generally accepted and, up to a point, even considered benevolent and beneficial, because it is compensated by the government’s inefficiency and sloppiness in collecting taxes. The southern citizens do not expect much from the state, but the state does not expect much from them either. Southerners do not trust the government, but the political system works and is not even perceived to be oppressive because the state in return adopts a laissez faire attitude: it does not worry about being cheated by the citizens. Outwitting the taxman is generally accepted behavior and may even make a man so popular that he can rise to the political top. This is what happened with Silvio Berlusconi in Italy.

Before the euro was introduced, the states in Southern Europe made up for their losses in taxes by occasionally devaluating the currency as a method of indirect tax collection. The introduction of the euro, however, has made the latter impossible, and has put pressure on the governments in the south to improve their efficiency in collecting taxes. As the latter would make these governments hugely unpopular – by breaking the existing modus vivendi, a workable system which so far had not been perceived to be politically oppressive, they would in fact become oppressive – they preferred to accumulate huge budget deficits. When the euro was introduced, the EU authorities imposed upon the eurozone countries the obligation to keep their budget deficit below 3% of GDP and their government debt below 60% of GDP. To hide their real performance from the EU authorities, the southern governments cheated and fixed the figures in the same way that their own citizens had always been allowed to cheat.

The EU is now forcing the Greek government to clamp down on its citizens in a fashion which is incompatible with the political culture in Greece. If Greece fails to do so, the Germans will be forced to bail them out. The latter, however, is perceived by German taxpayers, who rebel against being forced to pay for the “cheating Greeks,” as unacceptable political oppression by the EU. [...]

So somethings gotta give, somewhere. Where will the breaking point be? North or South?

The article goes on to predict that culture will prevail over monetary policy. Apparently, even George Soros is predicting the collapse of the Euro and the breakup of the European Union.     

Is the EU’s currency, the euro, in trouble?

Apparently the Euro is threatened, because of Spain and Greece:

The EU’s Horrible Honeymoon

[...] At this point Europe is not even halfway its 100-day political “honeymoon” since the Treaty of Lisbon, which transformed the EU into a state in its own right, came into force. So far the honeymoon has been a nightmare. Since the beginning of the year, the EU’s currency, the euro, is on the brink of collapse; Greece has been placed under EU financial supervision to prevent it from going bankrupt. Now U.S. President Barack Obama has announced that he will not attend next May’s EU summit in Madrid. It was to have been Obama’s first visit to post-Lisbon Europe – the consecration of the new political order.

[...]

Although Obama’s snub hurts Europe’s pride, the euro’s monetary problems are far more serious. They not only affect Europe’s finances and economy, but may also tear down the political EU framework. When the European Commission placed Athens under EU supervision last week, Greece was almost bankrupt. Brussels has forced the Greek government to present a plan to drastically reduce its budget deficit from 13% to 3% by the end of 2012. The plan will cost the Greeks blood, sweat and tears. It includes a freeze on civil service wages and the postponement of the retirement age. Brussels has invoked new EU powers under Article 121 of the Lisbon Treaty, which allow it to reshape the structure of Greece’s pensions, healthcare, labor market and private commerce.

“The envisaged correction of the deficit is feasible but subject to risks,” says EU Commission President Barroso – an understatement. The Commission fears a backlash from the Greek unions, who might organize strikes and bring down the Greek government. Trade unions in other countries are nervous, too. They warn that it is unacceptable that the European Commission intervenes in setting national wages.

The EU’s Monetary Affairs Commissioner Joaquin Almunia declared that the Greek targets will be enforced strongly and that, if necessary, even more draconian measures will be taken. “Every time we see or perceive slippages, we will ask for additional measures to correct these slippages. Never before have we established so detailed and tough a system of surveillance,” Almunia said. He has demanded quarterly updates on progress towards reduction targets, as well as a first report on 16 March. “This is the first time,” he said, “we have established such an intense and quasi-permanent system of monitoring.”

Much is at stake. In the coming weeks, the strength of the euro will depend on whether the markets believe that the government in Athens is strong enough to implement the reforms or trust that the other eurozone countries will bail out the Greeks. This year the eurozone governments have already borrowed a record €110bn from the markets, thereby forcing up the cost of borrowing for countries with the weakest public finances, such as Greece, Portugal, Spain, Ireland and Italy.

[...]

Even if the situation in Greece can be stabilized, the EU’s nightmare is far from over. The next eurozone dominos that might fall are Portugal and Spain. Portugal’s deficit reached 9.3% of GDP last year, Spain’s 11.4%. [...]

The article describes how there is a great deal of resistance to the idea of "bailing out" Greece, and that Greece may even be "excluded from the Eurozone" before a bailout were allowed to happen, although such an exclusion would contravene the laws of the EU.

But worse still, is the threat of Spain's financial collapse. It has the fourth largest economy in the EU. If it fails, it will be devastating for the EU.