After Greek CDS went offerless, and is about to pass 1,000 bps following news of Austria's defection from the EU rescue fund over Greece's endless lies, now we get the next defector: Finland, who it appears is opposing an Irish rescue. This is not too odd, since Finland actually has a viable banking system whose viability does not depend on the generosity of Irish and European taxpayers. What this means, however, is that European unity is finally coming apart at the seams.
Sure enough, here is ever cheerful Goldman appartchik Erik Nielsen trying to spin this latest game theory collapse into good news:
Newswires have just reported that Finland is opposed to an aid-package for Ireland.
While activation of the EFSF would require a unanimous decision by the Eurogroup, in my view, the reported Finnish opposition is not very important:
First, we are still only in the stage of informal negotiations, and the Irish are surely trying to get an agreement with conditionality very close to their existing policies (to limit the domestic political fall-out), and - specifically - they dont want to touch their low corporate tax rate. The Irish stance on the issue of tax codes has long been an irritant for the rest of the Eurozone, so its no surprise that some now try and get this addressed. But it doesn't mean that they'll succeeed. I suspect that it'll be another few days before we are near an agreement.
Second, I would be absolutely stunned if any of the small countries were to hold up a package after the Commission and IMF have agreed on it (and Germany and France have signed off). If someone really were to hold out, their share of the EFSF guarantee might not be used, but that wouldn't block the program.