From Mish Shedlock

UK prime minister David Cameron was ready to sign on the Merkozy treaty dotted line if he got exceptions to some UK-unfriendly rules.

When Sarkozy refused to go along, the two got into a nice verbal feud, and Cameron finally said what he should have said months if not years ago as reported by Yahoo!Finance in New treaty Splits European Union

“What was on offer is not in Britain’s interest so I didn’t agree to it,” he told reporters in Brussels.

“We’re not in the euro and I’m glad we’re not in the euro,” he said. “We’re never going to join the euro and we’re never going to give up this kind of sovereignty that these countries are having to give up.”

Now, what’s so hard about that? Cameron’s next move should be to tell the EU to take all of their rules and shove them too.

Hungary Opts Out, So will Sweden, Czech Republic Undecided

Swedish Prime Minister Fredrik Reinfeldt signaled after the meeting it was unlikely his country would join the accord.

“It would be very odd signing up to a treaty pointing out as if we were a eurozone country,” he told The Associated Press. “And that was never the aim.”

The governments signing onto the new treaty will have to agree to allow unprecedented intervention in national budgets by EU-wide bodies.

According to a statement issued after the meeting broke up, governments participating in the agreement will need to have balanced budgets — which is counted as a structural deficit no greater than 0.5 percent of gross domestic product — and will have to amend their constitutions to include such a requirement.

The treaty will include an unspecified “automatic correction mechanism” for countries that break the rules, the statement said.

In addition, countries that run deficits larger than 3 percent will face sanctions.

To prevent such deficits, countries will have to submit their national budgets to the European Commission, which will have the authority to request that they be revised. Countries will also have to report in advance how much they plan to borrow.

Extreme Legal Complications Already

Via Google Translate please consider this snip from Spiegel Online

The new agreement between the 23 EU countries, according to experts, however, could lead to numerous legal problems, because the rules must not contradict rules of the EU treaties.

Cameron calls into question whether the proposed new fiscal union is allowed to use EU-institutions. “The institutions of the European Union are the European Union, the 27,” said British Prime Minister.

Expect Discord to Rapidly Spread

The simple solution to Cameron’s legal problem is for the UK (and any other country with the same objection) to leave the EU. All it would take is a voter referendum.

Meanwhile, the discord between Cameron and Sarkozy is going to quickly spread elsewhere.

The more details this new treaty adds, the more discord there will be. The entire package will blow up in May (if not long before that) if any country or the German supreme court insists on a voter referendum.

From: Cullen Roche ( pragmatic capitalist )

“It’s still uncertain if this week’s summit will finally resolve the Eurozone sovereign debt crisis, but early reports certainly leave some doubts.  If it should turn out that EMU leaders are not ready to fire a bazooka then the first quarter of next year will almost certainly fore the issue.

As Credit Agricole recently noted (see the chart below), the debt issuance calendar in early 2012 is heavy.  But it’s particularly heavy for Italy.  As we all know by now, Italy is where the road ends in this crisis.  If Italy defaults the EMU as we know it will never be the same.  In 2012 Italy has total debt redemptions of almost $300B.   In the first 4 months of the year Italy has redemptions of $115B.   This is going to kick the EMU crisis into overdrive early next year.  If we don’t hear a sustainable and permanent fix later this week then prepare yourselves for early next year.  This crisis is almost certain to reach a new crisis peak as EMU debt redemptions force the issue”.