European finance ministers are meeting again, this time in Poland. The Eurozone sovereign debt crisis grows, the warnings become more hysterical, and Europe draws closer to the edge of the abyss.
The continent faces a frighteningly simple problem. Virtually every Eurozone country has a huge stock of debt, and yes, that does include Germany. Public expenditures are outpacing revenues. The only way these deficits can continue is if the cash starved Eurozone periphery can persuade someone to extend them a credit line. Unfortunately, creditors have an awkward desire to be repaid. Since Europe is now carrying crushing levels of public debt, the ability to repay is, to say the least, an open question. Therefore, creditors aren't exactly queuing up to buy Eurozone government paper.
Over the last few weeks, the Eurozone's desperate search for new money has become embarrassing. Europe is now actively canvassing emerging market economies, such as Brazil, Russia, India and China, for temporary credit lines. In effect, this quartet of comparatively poor but dynamic economies are being asked to support the unsustainable lifestyles of a continent of decadent, ageing and unproductive countries.
This absurd quest for short term money proves that the Eurozone seems utterly incapable of reaching any kind of minimal consensus on what needs to be done in order to exit from this debt crisis. It is stuck in a sticky marsh of craven expediency, and hence the begging bowl presented before emerging market economies. Thus, the thinking seems to be that it is better to get a short term injection of cash from a dubious regime abroad than confront fiscal imbalances at home.
Good luck with that.....