The punchline to yesterday’s eurosummit comes in the very first paragraph of the
official statement, released in the darkness of morning:
"The euro continues to rest on solid fundamentals."
Now that you’ve brushed away the tears from that one, what was it that was actually agreed upon in the end? The main measure is effectively a fiscal target for Greece: its national debt,
expected to peak at around 180 per cent of GDP in 2013, will come down to 120 per cent by 2020. And this will be achieved by cutting the value of bonds held by private investors in half, alongside
further waves of privitisation and Greek frugality. Brussels will strengthen its "monitoring capacity on the ground," to ensure that Athens abides by these strictures.
The markets appear to have been mildly heartened by that, and by other measures including another €130 billion for Greece and an enormous expansion of the European Financial Stability Facility. But only
the most gullible eurocrats will be fully reassured by this plan. There is, as Fraser suggested last night, an
abiding stench of fantasy about all these numbers. Europe’s begging bowl has yet to be
replenished by China. And that 50 per cent "haircut" for holders of Greek debt? FT’s Alphaville blog notes how the bondholders sound more tentative about it, and the details of it, than Merkel and Sarkozy would have you
Still, the politicians have their communiqué, and it is more concrete than we might have expected a couple of days ago. They are already spinning this as a terrific success. That is, until the next emergency summit.