Europe's legacy to its children
27 October 2011
European leaders have reached a “three-pronged” agreement which they say is vital to resolving the region’s massive debt crisis.
The crisis meeting of European leaders has voted to increase the European Financial Stability Facility (the European emergency rescue fund) because of the expected default of Greece on its debt and the likely contagion on Italian and French banks. It has been boosted to 1trillion euros (£880billion) without providing new money, but by some creative accounting and leverage or ‘servicing’ of debt.
The private banks holding Greek debt have accepted a loss of 50% or, in the language of commentators, had a severe haircut. Banks must also raise more capital to protect them against losses resulting from any future government defaults.
Angela Merkel, the German chancellor, called this the greatest crisis to face Europe since the second world war. This is where the European dream has reached. The difficulty of 27 member states in the EU, and 17 member states in the euro, to find a common policy is made manifest for all to see. Either there will be greater political integration or member states will leave the euro. The BRIC (Brazil, Russia, India and China) countries may yet help to bail out the EU’s precarious, indebted position, and the price of this will be the diminishing of western hegemony.
Just as climate change is God’s method of knocking reluctant international heads together, so the sovereign debt crisis may yet be used to introduce a more equitable international scene between nations and the world at large. The profligacy of western nations, especially southern European countries such as Italy and Greece, is being reigned in, but at a price on future generations. The sins of western nations are “visiting the iniquity of the fathers upon the children to the third and fourth generation” (Exodus 20:5).
