Grim faces and low spirits as euro finance ministers meet
Eurozone finance ministers faced a battle on two fronts last night -- and both looked grim. Firstly, they need to come up with measures to tackle the debt crisis -- even as the crisis spins further out of control.
Secondly, they are being forced to confront a strident power grab from an increasingly assertive "euro elite", led by Germany, France and the European Commission.
Officially, Finance Minister Michael Noonan and other ministers met in Brussels for scheduled talks, where they had hoped to finalise details of an October 27 deal presented by euro leaders as a "comprehensive package" to contain the debt crisis.
According to the October deal, Greece will be sorted out once and for all -- with a second bailout and losses of 50 cent in the euro for banks that loaned the country money.
In tandem, the eurozone will create a financial firewall of at least €1 trillion, available to contain effects of that move.
Last night's talks were supposed to put flesh on those bare bones, but events in Rome and Athens had already raced ahead.
Even as ministers arrived for the session, Italian borrowing costs hit a level that proves beyond doubt that the eurozone's third biggest economy is on the brink of needing its own massive bailout.
Greece was putting in place a "national unity government" that will only sit long enough to sign the bailout before emergency elections.
It all meant ministers were meeting to discuss a deal that, to most eyes, has already failed.
There were grim faces in Brussels, and little prospect of success.
In fact, with hopes so low, rumours quickly spread that talks would have to be followed up with an emergency meeting on November 17.
That rumour killed what little energy there was in Brussels, leaving little more to do than rehash the various alternatives for increasing the bailout fund, fret about Italy and hope that the interim regime in Athens can struggle on until elections are held.
If the substantive talks were on hold, there was plenty of room on the margins of the meeting to air concerns about the increasing assertiveness of a clique of a well co-ordinated, self-appointed voices at the European core.
It came after it emerged that an informal body called the Frankfurt Group was increasingly trying to co-ordinate the response to the debt crisis.
The new group includes the French and German heads of government, the presidents of the European Commission and European Council plus the heads of the European Central Bank and the IMF.
The group is undoubtedly filling a leadership vacuum -- and includes the ultimate paymasters for any big-money rescue deals, but it is causing major disquiet.
The group is understood to have met a number of times during last week's G20 and its hand is widely seen in forcing Italy to accept an EU/IMF mission, and even in forcing Greek politicians to form their new administration.
Finance ministers, particularly those outside the "Frankfurt" loop, are wondering just when the by-now familiar finger wagging from "Frankfurt" turned into shoving, and what, if anything, can be done to reign it in.