State of Fear

Unelected is the word being used to describe the caretaker governments calling the shots in failing European countries. One source says, “Monti names unelected government of technocrats and bankers” as the Telegraph observes that “we have two unelected leaders now in place in Italy and Greece.”

Meanwhile Mario Draghi, the chairman of the European Central Bank, Christine Lagard of the IMF and three heads of influential EU bodies – Herman Van Rompuy, Ollie Rehn and Jose Manuiel Barroso – are calling the shots alongside elected leaders Merkel, Sarkozy and Luxembourg PM Jean-Claude Juncker. The tin-foil hats are on in full force. …

“The fate of the eurozone now seems to centre on the actions of eight people,” points out William Poole, strategist at FC Exchange. “Formed at the last G20 meeting, the so-called “Group de Francfort” came together at outgoing ECB president, Jean Claude Trichet’s leaving bash. Whilst the 2007-2009 financial crisis saw the defaults of banks and households, the threat of entire countries going bankrupt has finally been recognised with the current collaboration the closest thing to a European cabinet.

The Wall Street Journal has a roundup of the new Italian cabinet, noting that most of them “have strong connections with Brussels”. The inference is that the EU is now in State of Emergency mode with respect to the Eurozone crisis. States of Emergency are doubtful political places where it is best not to linger too long. One question that has not been answered, apart from where this is leading Europe is whether a similar State of Emergency will be required if the financial crisis crosses the Atlantic in full force. But Nigel Farage is very exercised, and given his previous track record, it is perhaps best to listen to what he says. After the Read More.

http://www.youtube.com/watch?v=pHfZ3JFzHgU

And bankers in North America are getting nervous. Here’s Willem Buiter, chief economist at Citigroup Inc pretty much reciting the Hail Mary and praying for a deux ex machina to head off what he sees as disaster.