It is now so obvious as to be barely worth saying, but the most powerful political force in the world today is not China or the United States, far less the EU. It is the bond market. I'm appalled by the spectacle of democratically-elected governments in Greece and Italy being replaced by unelected, federalist technocrats at the behest of the EU, the ECB and the IMF, but to imagine that real power in the Eurozone lies with these three supranational institutions is naive. Rather, those three bodies are just doing what they imagine will please the bond market. Papandreou and Berlusconi are the sacrificial lambs that the Frankfurt Group has slaughtered in the hope of placating the all-powerful beast – and it is testimony to just how ravenous and insatiable that beast is that the sacrifices have barely registered. Commentators routinely maintain that the fate of the Euro and, by extension, the European project, lies with Germany when what they mean is that Germany now has to decide whether to authorise the ECB to purchase the debts of the Eurozone countries that the bond market has lost confidence in or is about to lose confidence in. In other words, Germany can only save the Euro by doing the bidding of the bond market. And the bond market is growing impatient. (To read more, click here.)
