The Grand Plan for Europe became the Waterloo of the Eurozone

The pre-Cannes meeting between Merko-zy and Papandreou did not change the mind of the Greek Prime Minister. The vote of confidence or more precisely the lack of it, is still going ahead and will probably culminate tomorrow, Friday.

This morning the Greek Finance Minister is indicating his displeasure with the PM by publicly opposing Papandreou - this is political posturing developing into a contention for the leadership of the political party PASOK. There is a brief rally in the market based on the idea, wrongly in my opinion, that the finance minister can and will take over and win a confidence vote, but the facts remains the same:

• Greece has been pushed too far and has not complied with the austerity it promised
• We are beyond any proper solution for this mess and only the 'blame game' remains with Greece potentially leaving the EURO inside of the next three months.

Note also that the influential newspaper Bild Zeitung this morning is calling for Greece to be thrown out of the EU and to have a German referendum on the bailouts.

Waterloo of EU
Last week's EU Summit looks more and more like the Waterloo of the EU. Napoleon tried to build  an empire with the wrong framework - The Napoleon Code. He became too aggressive relative to the strength of his army and resources. Similarily the EU concept of a United States of Europe quickly became a political idea of buiding a monetary and currency zone. Unfortunately the stability and growth pact was never trully enacted and as such Europe became a house without a foundation.

Europe has overstretched its ability
The EU has overstretched its ability and resources and the next 48 hours is yet again about saving the concept of the Eurozone as a powerful, pragmatic way of conducting fiscal and monetary policies, but in reality we have become saturated with debt, empty promises, and a political system which is reduced to producing plans for later plans.

Europe now needs action not empty words - but don't hold your breath as the domestic political agendas in the key players' home countries are turning increasingly hostile and herein lies the real threat!

ECB rate cut - who cares?
Finally, the European Central Bank meeting today - I am tempted to say: who cares? No change, 25 or 50 basis point cuts are no longer of relevance! Easy monetary policy is one of the reasons why we are where we are today, so beyond the 24 hour market impact the reality remains that the Eurozone could look very different as we switch our calendars from 2011 to 2012.