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Yes, it is a Soccer Game. No, this time is the time for Europe to win.

Who won? Who lost?

Spain won from the euro summit: pretty nice bail-out of its banks at the expense of the European Taxpayer. And for Ireland who will ask for equal treatment for its banks and might get reimbursed a bit too for its big expense bill on banks.

Germany won, definitely: having the European Central Bank in charge of european banking supervision from October onwards implies that the Bundesbank will be in charge from now on (much more than ever) of the industrial policy of the banking sector in Europe, arguably the most important sector of the European economy. Chapeau to Merkel.

Italy? Well Italy says it has won support on an anti-spread policy from the ECB and the Stabilization Fund, meant to obtain a ceiling on Italian government bond yields with respect to Bund issued by Germany. The rapid decline in spreads of crisis-countries that occurred after the European summit has much to do with the Spanish banking bail-out and little to do with anything else. Spreads on Spanish bonds declined by 60 basis points from June 27 and that explains the 40 basis point correlated decline in Italian yield differentials. If really something for Italy was negotiated during the Summit, for example a ceiling of 250 basis points on Italy vs. Germany yields, we will see the rumour rapidly spreading in financial markets and the spreads equally rapidly converging to that threshold. If we do not, then no deal occurred and Italy after all hasn’t obtained much from the Summit.


But it is quite sad to speak of who won and who lost while we should concentrate ourselves on whether Europe has won, i.e. on whether the euro crisis is closer to a solution or not.

Well I can tell you that Europe will have won if and once the European Parliament will be granted the supervision of the ECB activity on banking supervision. We know the ECB will be captured by banking sector interests with a high likelihood and will not provide a banking sector that fully helps the economy as it should and could. An independent Authority would have been better. Since it has to be the ECB, let it at least be fully accountable to the European parliament if we want to avoid further future banking crises.

I can also tell you that Europe will have won when this recession will be over. As of now, the latest estimates claim a -2,4% recession for 2012 in Italy, doubling government estimates of -1,2% just a few months ago. How long can we destroy European lives without destroying Europe?

How long? We need to fight this recession NOW. If we are Europeans. If we are a team.

Tomorrow I will watch Spain against Italy and root for Italy. But please be aware that this euro thing, this euro thing yes, this is no soccer game between European teams. No, we are not here to win as a single nation. No, here the team to root for is Europe.

And, as Al Pacino said:

“Either we heal as a team or we are going to crumble… You will see a guy who will sacrifice himself for this team because he knows when it comes down to it you are going to do the same for him. That’s a team gentlemen. And either we heal NOW as a team or we will die as individuals.”


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