A make or break European Union summit this weekend which could decide the future of the euro but I sincerely doubt that any real accord is going to be reached. The damage has already been done and it is going to cost billions to refloat the single currency. It is going to take a small miracle for the states in southern Europe to get their finances under control. Greece, is a good example. The problem is that these states should never have been allowed to join the single currency in the first place. But now it is too late.
The new Sarkozy/Merkel treaty calls for a maximum three percent budget deficit; this is amost laughable because the majority of states have deficits close to the double digit mark. To save the euro the European Union is going to have to take radical action. Those states who are not willing to put their finances in order must be ejected and a new smaller euro-zone formed. Chancellor Angela Merkel is right; Europe is facing one of its biggest challenges to date but so far she has lacked the necessary political will and courage to take some rather nasty economic decisions. Greece is bankrupt and sooner or later it is going to need a another bail-out. Even Italy has its fair share of problems. The eyes of the world are on Europe and watching to see if it can resolve its major financial problems. Unfortunately I believe it can´t unless some rather nasty decisions are taken starting with Greece and then any other state that doesn´t balance its books.