EUROZONE CRISIS AVERTED ....... FOR NOW.

While the leaders of the Eurozone countries pat themselves on their collective backs for having resolved their problems, it's worth rowing back a bit and thinking.

It seems that the agreement that's been reached is somewhat nebulous and consists more of words than deeds. Vast numbers have been discussed and apparently committed to, but with little or no indication as to where most of the money is to come from. The write down of Greek national debt, theoretically to be borne by an array of banks will, in reality be borne by savers and shareholders in the affected banks, but the huge sums to be made available as a safeguard against any future national disasters have no stated place of origin. President Sarkozy has reportedly said that perhaps the Chinese will invest but, if they do, this will be for their own self interest and not for any European good. The Chinese already own enormous amounts of US debt and any investment in Europe will do no more than increase their influence in western economies. Is this really what Europe wants ?

That said, what are the alternatives ? European governments have been profligate for decades; they've run up huge debts while also encouraging their banks to lend silly amounts to people who have no realistic chance of ever repaying the money. The consequence is that the western world, collectively, has far more debt than it can manage without outside help or internal collapse. The 'deal' reached by European leaders last night has been dressed up to appear like a genuine solution but it's more likely to turn out to be a sticking plaster, designed to placate the financial world for a short time, while a more long term resolution can be worked out.

Nonetheless, the world's financial markets seem to have been pleased with the outcome, at least for the time being, though how long it will be before they change their tune is anyones' guess. My guess, for what it's worth, is that sentiment may well begin to change within 2 or 3 weeks and could easily reverse altogether within the same number of months.