This is getting to be as predictable as it is impotent. This is like watching Obama threaten Iran over nuclear development. Sure, the rhetoric is there. Sometimes the talk is tough. No one believes they’ll ever do anything about it.
MADRID (Reuters) – The European Commission will propose giving Spain, France and several other euro zone states more time to cut their public deficits below the target limit of 3 percent of GDP, newspaper El Pais said on Saturday.
Citing senior sources at the European Commission and in the Spanish government, the leading Spanish daily said France would likely get an extra year until 2014 rather than 2013 to rein in its fiscal gap.
Spain would likely be given until 2015 or 2016 rather than 2014.
Right. But, what were they going to do when France, Spain, and all the others didn’t meet their targets? Nothing. If they kicked them out of the Euro zone, then there wouldn’t be a Euro zone, at least not one we’re familiar with. There would only be a handful of nations who qualified to stay. The value of the Euro would shoot up and those nations remaining wouldn’t be able to sell anything to the debt ridden nations. They might as well target zero percent of GDP, it would be just as realistic. And, they may as well threaten military intervention, it would be just as realistic. The targets have become not a rule, but guidelines which nations simply ignore.
And why wouldn’t they? If they ignore it well enough and long enough, they’ll get free money from the ECB and the IMF. If they’re lucky, they get some bond write-offs so they can issue more debt! The cleptocrats of the EU would never remove people from under their authority, so there is no ultimate threat.
In a couple of years, there will be nothing but printing and absolving of debt.