| 11.9°C Dublin

60 days to save the euro

THE currency as we know it is moving closer to endgame as the financial crisis deepens. Markets were on edge this morning after the disastrous German bond sale stoked fears that Europe's debt crisis was spreading further.





And Irish people may be asked if they want to continue in the euro experiment as Germany pushes for greater integration and interference in our budget.

As emergency talks to save the currency got underway, today, leading economist Colm McCarthy said there were problems with the euro from the start.

"The currency union itself was poorly designed in 1999 when it was launched," he said.

It now needed to be redesigned. German Chancellor Angela Merkel is also facing criticism for not doing enough to help.

Italy's Mario Monti was today meeting French prime minister Nicolas Sarcozy and Ms Merkel for crisis talks to find a plan to calm bond markets by undertaking reforms of the block's financial governance.

And Herald columnist Dan White said that it is d-day for European leaders.

“We haven’t got years. We have at best a few weeks to finally fix this crisis before the eurozone blows up,” he said.

Contagion

German backbencher, Frank Schaeffler of the Free Democrats (FDP), said that the contagion is spreading quickly.

“The debt crisis is burrowing ever deeper, like a worm, and is now reaching Germany,” he said.

Investors shunned an issue of German 10-year bonds yesterday, making bids of only €3.6bn for the €6bn of securities.

UCD economist Colm McCarthy said that the euro is tumbling towards disaster and leaders must redesign the union so that it “works properly”.

“At some stage there will be a real risk that Italy or Spain could get forced out of the bond market. That would be the endgame.”

Peter Brown, from the Irish Institute of Financial Trading, said that Chancellor Merkel is “playing a game of chicken with the market” and Ireland’s budget could soon be decided at European level.

“We're going to see proposals for closer integration which are very significant from an Irish point of view,” he said.

“Quite clearly the interest of that authority will be the core of Europe and not Ireland.

“Ireland needs to open a discussion - as to whether that's the way we want to go,” he added.

Former minister of European affairs Dick Roche writes in the Wall Street Journal that Ireland as a sacrificial lamb to save Europe was clearly not the solution.

“They believed the rot could be halted if Ireland was thrown to the wolves. They were wrong,” he said. “Their action simply whetted the appetite of the pack.

Independent TD Shane Ross said that Ireland is “only a bystander in this crisis” but he has no doubt that the euro is near collapse.

“Ireland is the poster boy for Europe. We get a pat on the back but our voice is not listened to. We genuflect to Merkel,” he told the Herald.

“The Eurozone is now out of control. It's 50-50'if the euro will survive in its present form.

“I've no doubt there are contingency plans being made in Paris and Frankfurt and, indeed, Dublin.

“It's a final attempt.”

hnews@herald.ie


Privacy