The eurozone turns its nose at Geithner’s bazooka

Eurozone finance ministers should perhaps have been a little more respectful of Tim Geithner.

A brief consideration of US monetary history would have thrown up some parallels in the early years of the United States monetary union that is the dollar.

The Austrian finance minister on-the-record comments suggest a remarkable froideur. It seems the one thing that the Eurozone leaders hate more than the euro falling apart appears to be being told by Americans how to avoid the euro falling apart.

Geithner’s plan was that the €440bn European Financial Stability Facility be “levered” by 5 times, to create a €2.2 trillion bazooka to deal with sovereign and banking issues in the eurozone.

The response of the Germans, relayed through the Austrian counterparts was pretty hostile. Basically, the US economy is in a worse state than Europe’s, so don’t lecture us. And if you will lecture us then accept a lecture in return on a global Tobin Tax, which you keep on blocking. Remarkable!

Chancellor George Osborne used a speech on Friday to signal the same sense of concern about the lack of movement in the eurozone. All that has emerged from the meeting in Poland so far appears to be a delay in the decision on disbursing Greece’s next round of funding (needed to keep the Greek government going).

Add in fears that the take-up on Greece’s bond haircut may fall short of the necessary 80 per cent, the incredible news that Madeira, a Portuguese island has found €1.1 billion of debt that it did not realise it had, and fears for Italy’s credit rating, and it appears the euro crisis is far from improving. Even if the action from world central banks has bought some time.

Follow @faisalislam on Twitter.