The Flemish bubble. Why the bailouts are not working.

Herman Van Rompuy is an old-school Belgian politician. He's Flemish and he has spent most of his career dealing with tiny politics defending the local Dutch (which is different from the language spoken in the Netherlands) and worried about street signs in French, from the other side of segregated Belgium, around Brussels. He writes haikus and lives in a village. 

He is the president of the European Council, a sort of mediator among the 27 EU Member States, but he has surrounded himself basically by other Flemish politicians from the same small world who tend to isolate anyone from the outside and still fight their petty wars. Van Rompuy doesn't like interviews and the few ones he does are usually confined to the tiny Flemish media, where sometimes he says strong words, thinking perhaps that they won't get very far from the six million people in Flanders.

The EU has lived for a long a time as Van Rompuy. As if nobody was watching. So it had (or it thought it had) the luxury of discussing until dawn to reach half-cooked agreements with big words and scarce content. But for the first time everybody is actually watching. And as many of us before, they don't like what they see. Nobel Joseph Stiglitz told me yesterday that “markets are saying something is wrong with the European framework” even if they don't know “exactly what”.

Over a decade ago, the EU tried to cheat by creating a single currency without a real economic, financial or fiscal policy behind it, not to mention a common working culture (although some bad habits as early retirement and apathy are widespread). And now it is surprised that no bailout is working.

The flaws are first of all in each country, and each Government, but also in Brussels. The Spanish bailout is not working, but we see that the three previously 'rescued' countries can't go back to the markets either. If Greece were to do it today, the State would have to offer a 30% interest for its bonds, 12 points or so more than Uganda. Portugal would pay 11%. And Ireland is not even counting.