French Minister Disses Bailout

France's Europe minister Pierre Lellouche, in an interview with FT, has questioned the legitimacy of the announced EU bailout of the PIIGS. Lellouche said that the bailout:

is an enormous change. It explains some of the reticence. It is expressly forbidden in the treaties by the famous no bail-out clause. De facto, we have changed the treaty...

Lellouche laid bare the French government’s conviction that the emergency stabilisation scheme agreed earlier this month amounted to a fundamental revision of the European Union’s rules and a leap towards an economic government for the bloc.

Mr Lellouche said Angela Merkel, the German chancellor, was “right” to say the EU could not be a “transfer zone” where rich members directly subsidised poorer ones.

But he said the scheme institutionalised solidarity between states. “The €440bn mechanism is nothing less than the importation of Nato’s Article 5 mutual defence clause applied to the eurozone. When one member is under attack the others are obliged to come to its defence.”

What all this means is not completely clear, other than those that are supposed to be writing checks are doing a lot of talking rather than writing checks.

In other words the fake bailout is getting so intolerable that French and German leaders can't even fake it any more. Not a good sign for those countries expecting checks.