So the politicians of the eurozone have blown it. Their summit this week came up with nothing more than an affirmation of previous decisions and very little in the way of extra funding. Without this new funding the eurozone banking system will be toast within weeks and certainly a couple of months.
British Prime Minister David Cameron opted out of a new treaty, breaking the consensus of the 27-nation European Union. He is like the lucky guy who gave up his ticket for the Titanic at the last moment. This will not save the UK from the consequences of the failure of the eurozone banking system but it will help mitigate the implosion.
Banks and countries too big to fail until they do
Watching the new Holywood blockbuster movie ‘Too Big To Fail’ on a flight back from the UK seemed to provide a strange sense of deja vu with regard to the eurozone crisis.
It was the same roll-out of financially challenging events and an inability to take control that led to the failure of Lehman. Only then did the Fed and Treasury come up with the Tarp rescue package to flood banks with liquidity and stabilize the system.