Eurozone crisis enters Wonga.com territory

In Europe, the FTSE 100, CAC 40 and Dax indices all plummeted after Asian markets dropped 3% in overnight trading. In the US the Dow Jones and the S&P 500 were both down by a similar amount. Although such is the febrile atmosphere at present that many of those early losses reversed on rumours that the ECB may be about to make a ‘buying announcement’. Like a flock of sheep being pursued by a wolf pack, there is no telling which way investors will break next.
 
The cause of all this weeping, wailing and gnashing of teeth? Why, the eurozone crisis, of course, which seems daily to scale new heights of urgency and drama. And not without reason – the scale of the debts involved and the way in which so many large economies are tied to one another through cross-holdings in each other's banks has the potential, should things go really pear-shaped, to make the collapse of Lehman Brothers and all that followed it look like a little local difficulty.
 
Today, all eyes remain on Italy, whose bond yields are firmly stuck in the oh mierda 7% zone, an unmistakable signal that Europe’s second largest economy is for the high jump whatever happens. This morning the Italian treasury has been driven to the rather desperate measure of selling one-year bonds in order to refinance maturing debts – the macroeconomic equivalent to getting a payday loan from Wonga.com.
 
Italian PM Silvio Berlusconi, the oldest bunga bunga artiste in town, is hardly a man to rely on in such a crisis – the fact that he is yet to stand down despite having stated his intention to simply fuelling suspicions that his pledge is yet another stalling tactic in an attempt to hang onto power. Whoever ends up nominally in charge, you can bet your last Italian euro note that Berlusconi will remain in the background, pulling the strings. He is far too well dug into the nation’s public life for it to be otherwise.
 
Meanwhile, the Greeks (remember them?) are still struggling to assemble a government of national unity after George Papandreou’s departure. A difficulty which suggests that national unity, like just about every other useful commodity, is in rather short supply there at the moment.
 
The question of whether they run out of money or not, while still of vital import to the Greeks themselves, is now increasingly irrelevant on a systemic level. Greece has missed whatever slim chance it once had to be the saviour of the euro, that dubious baton has now passed from Athens to Rome. Its chances of success don’t look much better.
 
All of which makes the efforts of the French and Germans, however well meant, to broker various rescue deals look anaemic by comparison. Things are getting worse rather than better. If the ECB does step in, it may not have the funds to stop a determined run on euro debt.
 
The real tragedy of the eurozone is one of leadership, this crisis has been a long time coming but those in charge preferred not to see the precipice towards which they were rapidly speeding. The only question now is whether there is time and will enough remaining to engineer some kind of soft landing, or whether Italy (and potentially the rest of Europe) is doomed to plunge, Wile e Coyote style, straight to the bottom and land in a distant puff of smoke…