Merkel Pushes EMF Proposal But Finds Opposition

Cracks and conflicts are developing inside the EU around the issue of creating a European Monetary Fund to bail out Greece and other countries in order to bail out the bankrupt banking system. According to press accounts, German Chancellor Angela Merkel is so keen at having the Inter-Alpha scheme of a European Monetary Fund pushed through, that she is in favor of a change in the European Treaties if necessary. "Of course we are going to have to ask ourselves who will pay into it, how independent it will be from the European Commission," Merkel said about the EMF. "Without treaty changes we can't form such a fund," she said. The reason behind the need for a treaty change is the EU's "no bail-out" rule, said Merkel, as outlined in the Maastricht Treaty, which set up the single currency area. However, the chances of having EU members agree to a change of the treaties are as great as having the polar icecaps melt.

For instance, Italy's Finance Minister Giulio Tremonti said he sees no ground for an EMF, speaking at an Aspen Institute Italy meeting in Venice yesterday. There is already an IMF, into which we all pay money, why don't we use that? Tremonti asked.

Tremonti also said he is tired of the use and focus upon the so-called PIGS countries. "We should instead focus on the home of financial speculation, which I call the FIRE countries," Tremonti said. FIRE stands for countries, such as the U.K. and the U.S.A., whose economies are based on "Finance, Insurance and Real Estate."

A so-called "father of the euro," Theo Waigel, also spoke strongly against the idea of an EMF on a TV talk show yesterday. An EMF would be a bad move, Waigel said, because it would establish a "moral hazard" principle. And Juergen Starck, from the European Central Bank, also attacked the idea.