New EC Thread
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Re: New EC Thread
Panda Sat 1 Sep - 23:48
fuzeta wrote:Article by Martin Walser top of this page. Whatever is this bloke on? Whatever it is I will give it a miss
yes fuzeta, he does go on.......essentially saying the EURO must survive and the bonds shared between Countries, forgetting the Wars between these same Countries over the centuries.
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Re: New EC Thread
Panda Sun 2 Sep - 14:44
The European Stability Mechanism, the euro area’s permanent rescue fund, is unlikely to be successful if Germany’s highest court rules against it this month, ESM chief Klaus Regling told Der Spiegel.
“Without Germany, the ESM doesn’t make any sense,” the magazine quoted Regling as saying in an e-mailed preview of a story to be published tomorrow. If all euro-area states meet targets and improve their competitiveness, the debt crisis “can be overcome in one to two years,” Regling said, according to the magazine
Rajoy Says Euro Zone Must Tackle Widely Disparate Debt Spreads
By Charles Penty - Sep 2, 2012 9:58 AM GMT+0100
A situation in which widely differing spreads exist in the cost of financing among euro zone nations cannot last for too long and the problem must be resolved, Spanish Prime Minister Mariano Rajoy says in interview with newspapers.
*Rajoy comments in joint interview with Spain’s ABC, Germany’s Bild am Sonntag, France’s Le Journal du Dimanche, Italy’s Corriere della Sera *Rajoy has “total and absolute conviction that the euro is irreversible,” he tells newspapers *Spain’s banks will be “absolutely secure” after country receives EU100b in European aid for its financial system, Rajoy says *Spain hasn’t made any decision on seeking a further bailout and will wait to see what steps the ECB takes, Rajoy tells newspapers *Spain’s existing commitments to cut deficit mean it will comply with conditions for eventual bond buying program by ECB, Rajoy says *Spanish regions including Catalonia must comply with their commitments to cut their deficits, Rajoy says *Rajoy will seek to cut income tax as soon as it can, Rajoy says *A Greek exit from euro would be “monumental failure” for European Union, Rajoy says
“Without Germany, the ESM doesn’t make any sense,” the magazine quoted Regling as saying in an e-mailed preview of a story to be published tomorrow. If all euro-area states meet targets and improve their competitiveness, the debt crisis “can be overcome in one to two years,” Regling said, according to the magazine
Rajoy Says Euro Zone Must Tackle Widely Disparate Debt Spreads
By Charles Penty - Sep 2, 2012 9:58 AM GMT+0100
A situation in which widely differing spreads exist in the cost of financing among euro zone nations cannot last for too long and the problem must be resolved, Spanish Prime Minister Mariano Rajoy says in interview with newspapers.
*Rajoy comments in joint interview with Spain’s ABC, Germany’s Bild am Sonntag, France’s Le Journal du Dimanche, Italy’s Corriere della Sera *Rajoy has “total and absolute conviction that the euro is irreversible,” he tells newspapers *Spain’s banks will be “absolutely secure” after country receives EU100b in European aid for its financial system, Rajoy says *Spain hasn’t made any decision on seeking a further bailout and will wait to see what steps the ECB takes, Rajoy tells newspapers *Spain’s existing commitments to cut deficit mean it will comply with conditions for eventual bond buying program by ECB, Rajoy says *Spanish regions including Catalonia must comply with their commitments to cut their deficits, Rajoy says *Rajoy will seek to cut income tax as soon as it can, Rajoy says *A Greek exit from euro would be “monumental failure” for European Union, Rajoy says
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Re: New EC Thread
Panda Mon 3 Sep - 17:41
Draghi, the one true statesman
3 September 2012Le Monde Paris
Peter Schrank
On 6 September, the European Central Bank President is expected to announce that his institution will attempt to resolve the Eurozone crisis by buring Spanish and Italian debt. Notwithstanding German opposition to this decision, Le Monde argues that it has the merit of defining a way forward for Europe.
This week, the President of the ECB should end the debate on bond purchases when he unveils the roadmap of the European Central Bank. In his standoff with the Bundesbank, Mario Draghi has used all his authority to save the single currency. And he has distinguished himself by his fervour.
On the euro front, the autumn rentrée into political activities following the summer holidays has a name, and just one: Mario Draghi. The man will not swerve, we can be sure, from that elegantly crooked smile and courtesy that is his way of showing calm and serenity in heavy weather. Now, more than ever, the future of the single currency is in the hands of the President of the European Central Bank (ECB). It is rather reassuring. This Italian is a true European – and, these days, that species is very rare indeed among the leaders of the EU countries.
Last week in the German weekly Die Zeit M. Draghi declared that he was ready to take "extraordinary measures" to save the euro. Clearly, the ECB will resume a program to buy Treasury bonds to come to the aid of the two major EU countries that are finding it hardest to get financing on the markets, Spain and Italy.
He's right. Madrid and Rome have taken courageous decisions to tackle some of the deep pathologies affecting them, and Italians and Spaniards are paying a high price for these plans for drastic fiscal consolidation and structural reforms. The financial markets, however, taking little notice, are continuing to demand exorbitant interest rates on government bonds from these countries.
The eurozone is being undermined by this, and the penalty thus imposed on two of the largest economies of the 17 is adding to the depressing atmosphere in Europe – this backdrop of high unemployment and anaemic growth. Given the efforts made by the two countries, the spread in the rates on their sovereign debt and that of Germany is irrational and has no serious macroeconomic foundation. In the end, the differential is even the negation of a single currency.
Bundesbank purists still grumbling
Markets have confidence only in the ECB. In betraying his intentions, Mario Draghi has salvaged the summer: rates did ease on Spanish debt, and especially on Italian debt. This Thursday Mr Draghi should clarify his plan for intervention. Perhaps though he will wait one more week, for the decision that is to come down from the German Constitutional Court on September 12 that will decide on whether the financial rescue fund of the 17 states – the European Stability Mechanism – complies with German Basic Law.
Mr Draghi has the support of German Chancellor Angela Merkel and French President François Hollande, who came a little closer over the summer. The purists at the Bundesbank are the only ones grumbling and about the risks of inflation. If they have nothing to offer to keep Spain and Italy from sinking, though, let them keep quiet!
Mr Draghi is imposing a strict conditionality on the interventions by the ECB. The states should carry on with their reforms. Because it will save them, the governments of the 17 states owe it to the Italian to carry out the rehabilitation of the architecture of the euro. It is urgent to complete the fiscal pact and move on to a banking union. It should not be said one day that the sole statesman of the region was the head of the ECB!
3 September 2012Le Monde Paris
Peter Schrank
On 6 September, the European Central Bank President is expected to announce that his institution will attempt to resolve the Eurozone crisis by buring Spanish and Italian debt. Notwithstanding German opposition to this decision, Le Monde argues that it has the merit of defining a way forward for Europe.
This week, the President of the ECB should end the debate on bond purchases when he unveils the roadmap of the European Central Bank. In his standoff with the Bundesbank, Mario Draghi has used all his authority to save the single currency. And he has distinguished himself by his fervour.
On the euro front, the autumn rentrée into political activities following the summer holidays has a name, and just one: Mario Draghi. The man will not swerve, we can be sure, from that elegantly crooked smile and courtesy that is his way of showing calm and serenity in heavy weather. Now, more than ever, the future of the single currency is in the hands of the President of the European Central Bank (ECB). It is rather reassuring. This Italian is a true European – and, these days, that species is very rare indeed among the leaders of the EU countries.
Last week in the German weekly Die Zeit M. Draghi declared that he was ready to take "extraordinary measures" to save the euro. Clearly, the ECB will resume a program to buy Treasury bonds to come to the aid of the two major EU countries that are finding it hardest to get financing on the markets, Spain and Italy.
He's right. Madrid and Rome have taken courageous decisions to tackle some of the deep pathologies affecting them, and Italians and Spaniards are paying a high price for these plans for drastic fiscal consolidation and structural reforms. The financial markets, however, taking little notice, are continuing to demand exorbitant interest rates on government bonds from these countries.
The eurozone is being undermined by this, and the penalty thus imposed on two of the largest economies of the 17 is adding to the depressing atmosphere in Europe – this backdrop of high unemployment and anaemic growth. Given the efforts made by the two countries, the spread in the rates on their sovereign debt and that of Germany is irrational and has no serious macroeconomic foundation. In the end, the differential is even the negation of a single currency.
Bundesbank purists still grumbling
Markets have confidence only in the ECB. In betraying his intentions, Mario Draghi has salvaged the summer: rates did ease on Spanish debt, and especially on Italian debt. This Thursday Mr Draghi should clarify his plan for intervention. Perhaps though he will wait one more week, for the decision that is to come down from the German Constitutional Court on September 12 that will decide on whether the financial rescue fund of the 17 states – the European Stability Mechanism – complies with German Basic Law.
Mr Draghi has the support of German Chancellor Angela Merkel and French President François Hollande, who came a little closer over the summer. The purists at the Bundesbank are the only ones grumbling and about the risks of inflation. If they have nothing to offer to keep Spain and Italy from sinking, though, let them keep quiet!
Mr Draghi is imposing a strict conditionality on the interventions by the ECB. The states should carry on with their reforms. Because it will save them, the governments of the 17 states owe it to the Italian to carry out the rehabilitation of the architecture of the euro. It is urgent to complete the fiscal pact and move on to a banking union. It should not be said one day that the sole statesman of the region was the head of the ECB!
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Re: New EC Thread
Panda Mon 3 Sep - 18:17
Schaeuble Warns on ECB
By Tony Czuczka and Patrick Donahue - Sep 3, 2012 4:55 PM GMT+0100
German Chancellor Angela Merkel told her domestic critics that bailouts are here to stay, even as her finance minister warned against placing too much faith in theEuropean Central Bank’s ability to stop the crisis.
Merkel made a foray away from crisis fighting today as she traveled to a traditional political gathering in a packed beer tent in southern Germany to confront anti-bailout critics in her government coalition. Countries such as Greece “deserve our solidarity” as long as they meet commitments for overhauling their economies, she said.
Enlarge image
German Chancellor Angela Merkel
Peter Kneffel/AFP/Getty Images
German Chancellor Angela Merkel told members of her Bavarian Christian Social Union sister party in the town of Abensberg, northeast of Munich, “We need Europe, but we need a strong Europe.”
German Chancellor Angela Merkel told members of her Bavarian Christian Social Union sister party in the town of Abensberg, northeast of Munich, “We need Europe, but we need a strong Europe.” Photographer: Peter Kneffel/AFP/Getty Images
“We need Europe, but we need a strong Europe,” Merkel told members of her Bavarian Christian Social Union sister party in the town of Abensberg, northeast of Munich. “We can’t take up so much debt that tomorrow we won’t have anything left and we’ll be at the mercy of the financial markets.”
The appearance at a Bavarian political meeting offered a glimpse of how euro-crisis politics will steer public discourse as Germany heads into an election year. With markets awaiting details this week of a bond-buying plan from the ECB, Finance Minister Wolfgang Schaeuble said that Europe shouldn’t raise“false expectations” over the central bank’s ability to stem the turmoil, leaning on indebted nations such as Italy andSpain.
‘Solidarity’
Merkel also maintained pressure on Greece, saying the country must fulfil the terms of its bailouts in return for“solidarity,” while austerity programs undertaken in Spain andPortugal “require an effort.”
“We have to press for reforms in other countries even if they sometimes say we’re hard-line,” Merkel said. “It’s not enough just to keep muddling through. But I also say that in such a difficult phase these countries deserve our solidarity and that we root for them to overcome their difficulties.”
Almost three years after the crisis emerged in Greece, investors seeking an easing of the market tension are looking to ECB President Mario Draghi’s Sept. 6 press conference to give more details of his proposals to help lower borrowing government costs. Draghi said on Aug. 2 that bond purchasing will take place in tandem with the euro’s rescue funds and require strict conditions from governments.
Draghi Defense
Draghi today defended the bond buying proposal and in closed-door remarks to lawmakers in Brussels said he was comfortable with the bank purchasing debt of as much as three years, according Jean-Paul Gauzes, a member of the European Parliament who attended the sessions. Such purchases are within the powers of the ECB, he told lawmakers.
Any plan must fall within the mandate of the ECB, Schaeuble said in an interview today on Deutschlandfunk radio, adding that Germany won’t accept ECB financing of state budgets.
“We have to be very careful that we don’t raise false expectations,” Schaeuble told the broadcaster in Berlin. “It has to remain very clear, state debt can’t be financed through monetary policy. Therefore we can’t have a decision -- we would think it very wrong -- that’s not covered by the ECB mandate.”
Spanish Prime Minister Mariano Rajoy reiterated over the weekend that his government will wait to see what the ECB has to offer before seeking help to address rising bond yields. He said in a joint interview with Spain’s ABC, Germany’s Bild am Sonntag, France’s Le Journal du Dimanche and Italy’s Corriere della Sera that he’ll then make a decision “that’s good for Spain and for the euro.”
Onus on ECB
The country’s deputy prime minister, Soraya Saenz, went further in placing the onus on the ECB, telling state-run TVE today that “it’s up to them to work so that the single currency is truly a single currency.”
Spain’s 10-year yield ended little changed at 6.86 percent in Madrid after climbing 44 basis points last week. The euro also was little changed at $1.2597.
In Bavaria, Merkel renewed her attack on markets for their role in stoking Europe’s financial crisis, saying that they“haven’t served the people” and allowed a few to get rich at the expense of the many. Markets can’t be allowed to destroy the fruits of people’s labor and governments can’t be put at their mercy through excess debt, the chancellor said.
“The real question about our democracy is: Can we in Germany and in Europe win elections when we jointly stand up for solid finances, when we don’t always spend more than we take in?” Merkel told local CSU party officials dressed in Bavarian lederhosen and dirndl dresses.
Crisis Talks
Merkel’s comments, made one day before she hosts European Union President Herman Van Rompuy in Berlin, are the most explicit yet on her campaign themes for federal elections in the fall of 2013, to be held at the same time as a Bavarian state vote that will determine the CSU’s fate.
She shared the podium with the CSU’s general secretary, Alexander Dobrindt, whom she reprimanded last month after he predicted Greece would be out of the euro next year. Her coalition partners should “weigh their words,” she said then.
Schaeuble, who is due to meet with Greek Finance Minister Yannis Stournaras in the German capital tomorrow, said he was confident that a ruling by Germany’s Federal Constitutional Court on Sept. 12 won’t derail the euro-area’s permanent rescue fund, the European Stability Mechanism. Only with its endorsement can the legislation be approved and the 500 billion-euro ($628 billion) ESM go into operation.
“I can’t see any problem in our German constitution” with the ESM, he told students at an event in Strasbourg today. “I am sure that will not happen.”
By Tony Czuczka and Patrick Donahue - Sep 3, 2012 4:55 PM GMT+0100
German Chancellor Angela Merkel told her domestic critics that bailouts are here to stay, even as her finance minister warned against placing too much faith in theEuropean Central Bank’s ability to stop the crisis.
Merkel made a foray away from crisis fighting today as she traveled to a traditional political gathering in a packed beer tent in southern Germany to confront anti-bailout critics in her government coalition. Countries such as Greece “deserve our solidarity” as long as they meet commitments for overhauling their economies, she said.
Enlarge image
German Chancellor Angela Merkel
Peter Kneffel/AFP/Getty Images
German Chancellor Angela Merkel told members of her Bavarian Christian Social Union sister party in the town of Abensberg, northeast of Munich, “We need Europe, but we need a strong Europe.”
German Chancellor Angela Merkel told members of her Bavarian Christian Social Union sister party in the town of Abensberg, northeast of Munich, “We need Europe, but we need a strong Europe.” Photographer: Peter Kneffel/AFP/Getty Images
“We need Europe, but we need a strong Europe,” Merkel told members of her Bavarian Christian Social Union sister party in the town of Abensberg, northeast of Munich. “We can’t take up so much debt that tomorrow we won’t have anything left and we’ll be at the mercy of the financial markets.”
The appearance at a Bavarian political meeting offered a glimpse of how euro-crisis politics will steer public discourse as Germany heads into an election year. With markets awaiting details this week of a bond-buying plan from the ECB, Finance Minister Wolfgang Schaeuble said that Europe shouldn’t raise“false expectations” over the central bank’s ability to stem the turmoil, leaning on indebted nations such as Italy andSpain.
‘Solidarity’
Merkel also maintained pressure on Greece, saying the country must fulfil the terms of its bailouts in return for“solidarity,” while austerity programs undertaken in Spain andPortugal “require an effort.”
“We have to press for reforms in other countries even if they sometimes say we’re hard-line,” Merkel said. “It’s not enough just to keep muddling through. But I also say that in such a difficult phase these countries deserve our solidarity and that we root for them to overcome their difficulties.”
Almost three years after the crisis emerged in Greece, investors seeking an easing of the market tension are looking to ECB President Mario Draghi’s Sept. 6 press conference to give more details of his proposals to help lower borrowing government costs. Draghi said on Aug. 2 that bond purchasing will take place in tandem with the euro’s rescue funds and require strict conditions from governments.
Draghi Defense
Draghi today defended the bond buying proposal and in closed-door remarks to lawmakers in Brussels said he was comfortable with the bank purchasing debt of as much as three years, according Jean-Paul Gauzes, a member of the European Parliament who attended the sessions. Such purchases are within the powers of the ECB, he told lawmakers.
Any plan must fall within the mandate of the ECB, Schaeuble said in an interview today on Deutschlandfunk radio, adding that Germany won’t accept ECB financing of state budgets.
“We have to be very careful that we don’t raise false expectations,” Schaeuble told the broadcaster in Berlin. “It has to remain very clear, state debt can’t be financed through monetary policy. Therefore we can’t have a decision -- we would think it very wrong -- that’s not covered by the ECB mandate.”
Spanish Prime Minister Mariano Rajoy reiterated over the weekend that his government will wait to see what the ECB has to offer before seeking help to address rising bond yields. He said in a joint interview with Spain’s ABC, Germany’s Bild am Sonntag, France’s Le Journal du Dimanche and Italy’s Corriere della Sera that he’ll then make a decision “that’s good for Spain and for the euro.”
Onus on ECB
The country’s deputy prime minister, Soraya Saenz, went further in placing the onus on the ECB, telling state-run TVE today that “it’s up to them to work so that the single currency is truly a single currency.”
Spain’s 10-year yield ended little changed at 6.86 percent in Madrid after climbing 44 basis points last week. The euro also was little changed at $1.2597.
In Bavaria, Merkel renewed her attack on markets for their role in stoking Europe’s financial crisis, saying that they“haven’t served the people” and allowed a few to get rich at the expense of the many. Markets can’t be allowed to destroy the fruits of people’s labor and governments can’t be put at their mercy through excess debt, the chancellor said.
“The real question about our democracy is: Can we in Germany and in Europe win elections when we jointly stand up for solid finances, when we don’t always spend more than we take in?” Merkel told local CSU party officials dressed in Bavarian lederhosen and dirndl dresses.
Crisis Talks
Merkel’s comments, made one day before she hosts European Union President Herman Van Rompuy in Berlin, are the most explicit yet on her campaign themes for federal elections in the fall of 2013, to be held at the same time as a Bavarian state vote that will determine the CSU’s fate.
She shared the podium with the CSU’s general secretary, Alexander Dobrindt, whom she reprimanded last month after he predicted Greece would be out of the euro next year. Her coalition partners should “weigh their words,” she said then.
Schaeuble, who is due to meet with Greek Finance Minister Yannis Stournaras in the German capital tomorrow, said he was confident that a ruling by Germany’s Federal Constitutional Court on Sept. 12 won’t derail the euro-area’s permanent rescue fund, the European Stability Mechanism. Only with its endorsement can the legislation be approved and the 500 billion-euro ($628 billion) ESM go into operation.
“I can’t see any problem in our German constitution” with the ESM, he told students at an event in Strasbourg today. “I am sure that will not happen.”
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Re: New EC Thread
Panda Tue 4 Sep - 8:02
Draghi’s Silver Lining
Photograph by Daly and Newton/Getty Images
by Patrick Donahue| Sep. 3, 2012 8:17 AM EDT |
Posted in austerity, bailouts, bonds, debt, economics, euro, European Central Bank, Germany, IMF, markets
|1 Comment
The market is beginning to hum over the prospect that Mario Draghi’s bond-purchase plan won’t be enough — or not fleshed out enough — to live up to his big-bang promise that the European Central Bank will do whatever it...
Read more »
Today in Euro Crisis History: Don’t Blink Dept.
by James Hertling| Sep. 3, 2012 1:14 PM EDT |
Posted in austerity, budgets, Posts, Spain
|0 Comments
Europe’s debt crisis only seems like it has gone on forever. This series of blog posts looks at headlines from this date in previous years that highlight the roots, twists and turns of the current turmoil. September 3, 2007 Almunia...
Read more »
Photograph by John MacDougall/AFP/Getty Images
German Chancellor Angela Merkel on August 31, 2009.
Today in Euro Crisis History: Words to Live By
by James Hertling| Aug. 31, 2012 12:26 PM EDT |
Posted in banks, France, Germany, Posts
|0 Comments
Europe’s debt crisis only seems like it has gone on forever. This series of blog posts looks at headlines from this date in previous years that highlight the roots, twists and turns of the current turmoil. August 31, 2009 Merkel...
Read more »
Today in Euro Crisis History: Poisoned Chalice Edition
by James Hertling| Aug. 30, 2012 11:36 AM EDT |
Posted in elections, history, Posts, Spain
|0 Comments
Europe’s debt crisis only seems like it has gone on forever. This series of blog posts looks at headlines from this date in previous years that highlight the roots, twists and turns of the current turmoil. August 30, 2003 Spain’s...
Read more »
Today in Euro Crisis History: You Can Say That Again
by James Hertling| Aug. 29, 2012 12:56 PM EDT |
Posted in austerity, bailouts, economics, France, Posts
|0 Comments
Europe’s debt crisis only seems like it has gone on forever. This series of blog posts looks at headlines from this date in previous years that highlight the roots, twists and turns of the current turmoil. August 29, 2010 France...
Read more »
Photograph by Reed Saxon/AP Photo
Christine Lagarde in Jackson Hole, Aug. 27, 2011
Today in Euro Crisis History: Groundhog Day Edition
by James Hertling| Aug. 28, 2012 12:50 PM EDT |
Posted in bailouts, economics, IMF
|0 Comments
Europe’s debt crisis only seems like it has gone on forever. This series of blog posts looks at headlines from this date in previous years that highlight the roots, twists and turns of the current turmoil. August 28, 2011 IMF’s...
Read more »
Today in Euro Crisis History: Jackson Hole Edition
by James Hertling| Aug. 27, 2012 1:01 PM EDT |
Posted in banks, debt, economics, European Central Bank
|0 Comments
Europe’s debt crisis only seems like it has gone on forever. This series of blog posts looks at headlines from this date in previous years that highlight the roots, twists and turns of the current turmoil. August 27, 2010 Trichet...
Read more »
Today in Euro Crisis History: Collateral Damage
by James Hertling| Aug. 24, 2012 9:57 AM EDT |
Posted in austerity, bailouts, banks, euro, history
|0 Comments
Europe’s debt crisis only seems like it has gone on forever. This series of blog posts looks at headlines from this date in previous years that highlight the roots, twists and turns of the current turmoil. August 24, 2011 European...
Read more »
Today in Euro Crisis History: Previous Crises
by James Hertling| Aug. 23, 2012 12:35 PM EDT |
Posted in austerity, bailouts, banks, debt, euro, Germany, history
|0 Comments
Europe’s debt crisis only seems like it has gone on forever. This series of blog posts looks at headlines from this date in previous years that highlight the roots, twists and turns of the current turmoil. August 23, 1993 Germany’s...
Read more »
Today in Euro Crisis History: On the Money
by James Hertling| Aug. 22, 2012 10:17 AM EDT |
Posted in austerity, bailouts, banks, euro, European Central Bank, history
|0 Comments
Europe’s debt crisis only seems like it has gone on forever. This series looks at headlines from this date in previous years that highlight the roots, twists and turns of the current turmoil. August 22, 2009 Trichet Says He Can’t...
Read more »
Today in Euro Crisis History: Wishful Thinking
by James Hertling| Aug. 21, 2012 10:37 AM EDT |
Posted in austerity, bailouts, banks, euro, European Central Bank, history
|0 Comments
Europe’s debt crisis only seems like it’s gone on forever. This is a series that looks at headlines from this date in previous years that highlight the twists, turns and roots of the current turmoil. August 21, 2008 Wellink Urges...
Read more »
Photograph by Daly and Newton/Getty Images
by Patrick Donahue| Sep. 3, 2012 8:17 AM EDT |
Posted in austerity, bailouts, bonds, debt, economics, euro, European Central Bank, Germany, IMF, markets
|1 Comment
The market is beginning to hum over the prospect that Mario Draghi’s bond-purchase plan won’t be enough — or not fleshed out enough — to live up to his big-bang promise that the European Central Bank will do whatever it...
Read more »
Today in Euro Crisis History: Don’t Blink Dept.
by James Hertling| Sep. 3, 2012 1:14 PM EDT |
Posted in austerity, budgets, Posts, Spain
|0 Comments
Europe’s debt crisis only seems like it has gone on forever. This series of blog posts looks at headlines from this date in previous years that highlight the roots, twists and turns of the current turmoil. September 3, 2007 Almunia...
Read more »
Photograph by John MacDougall/AFP/Getty Images
German Chancellor Angela Merkel on August 31, 2009.
Today in Euro Crisis History: Words to Live By
by James Hertling| Aug. 31, 2012 12:26 PM EDT |
Posted in banks, France, Germany, Posts
|0 Comments
Europe’s debt crisis only seems like it has gone on forever. This series of blog posts looks at headlines from this date in previous years that highlight the roots, twists and turns of the current turmoil. August 31, 2009 Merkel...
Read more »
Today in Euro Crisis History: Poisoned Chalice Edition
by James Hertling| Aug. 30, 2012 11:36 AM EDT |
Posted in elections, history, Posts, Spain
|0 Comments
Europe’s debt crisis only seems like it has gone on forever. This series of blog posts looks at headlines from this date in previous years that highlight the roots, twists and turns of the current turmoil. August 30, 2003 Spain’s...
Read more »
Today in Euro Crisis History: You Can Say That Again
by James Hertling| Aug. 29, 2012 12:56 PM EDT |
Posted in austerity, bailouts, economics, France, Posts
|0 Comments
Europe’s debt crisis only seems like it has gone on forever. This series of blog posts looks at headlines from this date in previous years that highlight the roots, twists and turns of the current turmoil. August 29, 2010 France...
Read more »
Photograph by Reed Saxon/AP Photo
Christine Lagarde in Jackson Hole, Aug. 27, 2011
Today in Euro Crisis History: Groundhog Day Edition
by James Hertling| Aug. 28, 2012 12:50 PM EDT |
Posted in bailouts, economics, IMF
|0 Comments
Europe’s debt crisis only seems like it has gone on forever. This series of blog posts looks at headlines from this date in previous years that highlight the roots, twists and turns of the current turmoil. August 28, 2011 IMF’s...
Read more »
Today in Euro Crisis History: Jackson Hole Edition
by James Hertling| Aug. 27, 2012 1:01 PM EDT |
Posted in banks, debt, economics, European Central Bank
|0 Comments
Europe’s debt crisis only seems like it has gone on forever. This series of blog posts looks at headlines from this date in previous years that highlight the roots, twists and turns of the current turmoil. August 27, 2010 Trichet...
Read more »
Today in Euro Crisis History: Collateral Damage
by James Hertling| Aug. 24, 2012 9:57 AM EDT |
Posted in austerity, bailouts, banks, euro, history
|0 Comments
Europe’s debt crisis only seems like it has gone on forever. This series of blog posts looks at headlines from this date in previous years that highlight the roots, twists and turns of the current turmoil. August 24, 2011 European...
Read more »
Today in Euro Crisis History: Previous Crises
by James Hertling| Aug. 23, 2012 12:35 PM EDT |
Posted in austerity, bailouts, banks, debt, euro, Germany, history
|0 Comments
Europe’s debt crisis only seems like it has gone on forever. This series of blog posts looks at headlines from this date in previous years that highlight the roots, twists and turns of the current turmoil. August 23, 1993 Germany’s...
Read more »
Today in Euro Crisis History: On the Money
by James Hertling| Aug. 22, 2012 10:17 AM EDT |
Posted in austerity, bailouts, banks, euro, European Central Bank, history
|0 Comments
Europe’s debt crisis only seems like it has gone on forever. This series looks at headlines from this date in previous years that highlight the roots, twists and turns of the current turmoil. August 22, 2009 Trichet Says He Can’t...
Read more »
Today in Euro Crisis History: Wishful Thinking
by James Hertling| Aug. 21, 2012 10:37 AM EDT |
Posted in austerity, bailouts, banks, euro, European Central Bank, history
|0 Comments
Europe’s debt crisis only seems like it’s gone on forever. This is a series that looks at headlines from this date in previous years that highlight the twists, turns and roots of the current turmoil. August 21, 2008 Wellink Urges...
Read more »
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Re: New EC Thread
Panda Tue 4 Sep - 9:27
This page will automatically update every 90 secondsOn Off
• ECB should launch 'unlimited' bond buying, says OECD
• Monti to meet Hollande; Merkel to meet Van Rompuy
• Swiss economy contracts in second quarter
• Moody's cuts EU outlook to negative
• Chinese manufacturing hits three-year low
• Downturn in UK manufacturing eases in August
Latest
09.09 Yet more grim news from Spain, where the number of people registering for jobless benefits rose 38,179 from July to 4.63m in August. It marks the first rise in five months, amid a worsening recession.
09.03 While the leak of Mario Draghi's briefing might have provoked a political spat, it has helped bolster the euro against the dollar and to bring down bond yields.
Spanish 10-year yields are down 11.1 basis points to 6.7pc while Italy's are down 3.8 basis points to 5.7pc.
08.55 Members of the EU assembly have been chastised for revealing details of a confidential briefing with ECB president, Mario Draghi. Mr Draghi was taking part in a hearing organised by the EU assembly's economic and monetary affairs committee on the future of the euro and plans to build a so-called banking union.
Jean-Paul Gauzes, a French member of the panel, commented that Mr Draghi had told the commitee that he was comfortable with the central bank buying bonds with maturities up to about three years.
Members had their knuckles rapped over leaking their briefing, with the committee chairman Sharon Bowles saying the leaks were “a complete breach of confidence". "I think it has brought this house into disrepute,” she added.
Bloomberg reported:
While it had originally been intended that Draghi’s hearing with lawmakers would be public, that plan was changed because of the convention that senior ECB officials don’t comment publicly on policy in the week before an ECB Governing Council meeting, according to a parliament spokesman.
08.33 Turkey has found one way of making up for a slide in exports to Europe - by clocking up record gold sales to Iran.
Bloomberg reports that sales of precious metals to Iran jumped to $6.2bn this year through July from $21.9m in the same period last year, accounting for 70pc of Turkey’s increase in exports this year.
The transactions helped narrow the current-account gap to 8.3pc of gross domestic product from 10pc in 2011, even as sales to the European Union dropped by $3.4bn.
08.26 Another slice of not particularly positive news for eurozone leaders to ponder as they meet today. The Swiss economy unexpectedly contracted in the second quarter for the first time in almost as a year, as exports declined and companies cut spending.
Swiss output fell 0.1pc in the second quarter compared to the previous three months. The strong Swiss franc was partly to blame, as it hurt exports. Chemical, machinery, equipment and electronic exports were all down; only watch, precision instrument and vehicle exports held up.
08.19 The move by Moody's will perhaps be on the agenda at the plethora of talks coming up today. Mario Monti meets his French counterpart Francois Hollande in Rome and Herman Van Rompuy, president of the European Council, travels to Berlin for a conference with German Chancellor Angela Merkel.
Today, we also have a bond auction from Spain, which is hoping to issue between €2.5bn to €3.5bn.
08.10 Not a particularly positive start to the day. Moody's has cut its outlook on the triple-A rating of the European Union to negative, saying the move reflected credit risks of the bloc's key budget contributors.
Moody's said:
The outlook change to negative reflects the negative outlooks now assigned to the Aaa sovereign ratings of key contributors to the EU budget: Germany, France, the UK and the Netherlands, which together account for around 45pc of the EU's budget revenue. Moody's believes that it is reasonable to assume that the EU's creditworthiness should move in line with the creditworthiness of its strongest key member states.
However, Moody's did maintain the EU's triple-A rating for now, saying its "two key rationales" for assigning the bloc its highest rating remained unchanged: its "conservative budget management" and "the creditworthiness and support provided by its 27 member states".
.
• ECB should launch 'unlimited' bond buying, says OECD
• Monti to meet Hollande; Merkel to meet Van Rompuy
• Swiss economy contracts in second quarter
• Moody's cuts EU outlook to negative
• Chinese manufacturing hits three-year low
• Downturn in UK manufacturing eases in August
Latest
09.09 Yet more grim news from Spain, where the number of people registering for jobless benefits rose 38,179 from July to 4.63m in August. It marks the first rise in five months, amid a worsening recession.
09.03 While the leak of Mario Draghi's briefing might have provoked a political spat, it has helped bolster the euro against the dollar and to bring down bond yields.
Spanish 10-year yields are down 11.1 basis points to 6.7pc while Italy's are down 3.8 basis points to 5.7pc.
08.55 Members of the EU assembly have been chastised for revealing details of a confidential briefing with ECB president, Mario Draghi. Mr Draghi was taking part in a hearing organised by the EU assembly's economic and monetary affairs committee on the future of the euro and plans to build a so-called banking union.
Jean-Paul Gauzes, a French member of the panel, commented that Mr Draghi had told the commitee that he was comfortable with the central bank buying bonds with maturities up to about three years.
Members had their knuckles rapped over leaking their briefing, with the committee chairman Sharon Bowles saying the leaks were “a complete breach of confidence". "I think it has brought this house into disrepute,” she added.
Bloomberg reported:
While it had originally been intended that Draghi’s hearing with lawmakers would be public, that plan was changed because of the convention that senior ECB officials don’t comment publicly on policy in the week before an ECB Governing Council meeting, according to a parliament spokesman. 08.33 Turkey has found one way of making up for a slide in exports to Europe - by clocking up record gold sales to Iran.
Bloomberg reports that sales of precious metals to Iran jumped to $6.2bn this year through July from $21.9m in the same period last year, accounting for 70pc of Turkey’s increase in exports this year.
The transactions helped narrow the current-account gap to 8.3pc of gross domestic product from 10pc in 2011, even as sales to the European Union dropped by $3.4bn.
08.26 Another slice of not particularly positive news for eurozone leaders to ponder as they meet today. The Swiss economy unexpectedly contracted in the second quarter for the first time in almost as a year, as exports declined and companies cut spending.
Swiss output fell 0.1pc in the second quarter compared to the previous three months. The strong Swiss franc was partly to blame, as it hurt exports. Chemical, machinery, equipment and electronic exports were all down; only watch, precision instrument and vehicle exports held up.
08.19 The move by Moody's will perhaps be on the agenda at the plethora of talks coming up today. Mario Monti meets his French counterpart Francois Hollande in Rome and Herman Van Rompuy, president of the European Council, travels to Berlin for a conference with German Chancellor Angela Merkel.
Today, we also have a bond auction from Spain, which is hoping to issue between €2.5bn to €3.5bn.
08.10 Not a particularly positive start to the day. Moody's has cut its outlook on the triple-A rating of the European Union to negative, saying the move reflected credit risks of the bloc's key budget contributors.
Moody's said:
The outlook change to negative reflects the negative outlooks now assigned to the Aaa sovereign ratings of key contributors to the EU budget: Germany, France, the UK and the Netherlands, which together account for around 45pc of the EU's budget revenue. Moody's believes that it is reasonable to assume that the EU's creditworthiness should move in line with the creditworthiness of its strongest key member states. However, Moody's did maintain the EU's triple-A rating for now, saying its "two key rationales" for assigning the bloc its highest rating remained unchanged: its "conservative budget management" and "the creditworthiness and support provided by its 27 member states".
.
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Re: New EC Thread
Panda Tue 4 Sep - 10:27
Debt crisis: ECB should launch 'unlimited' bond buying, says OECD
The European Central Bank should launch an "unlimited" bond buying programme as part of vital efforts to stem the debt crisis, the secretary-general of the Organisation for Economic Cooperation and Development has warned.
Angel Gurria's warning came as Spanish leader Mariano Rajoy said he would consider asking for extra aid on top of the country's €100bn (£79bn) bank bail-out but would wait to see what conditions were attached to any rescue package. Photo: Reuters
All this shuttle diplomacy is spooking investors why they couldn't have arranged to me all together is puzzling they say.
The European Central Bank should launch an "unlimited" bond buying programme as part of vital efforts to stem the debt crisis, the secretary-general of the Organisation for Economic Cooperation and Development has warned.
Angel Gurria's warning came as Spanish leader Mariano Rajoy said he would consider asking for extra aid on top of the country's €100bn (£79bn) bank bail-out but would wait to see what conditions were attached to any rescue package. Photo: Reuters
All this shuttle diplomacy is spooking investors why they couldn't have arranged to me all together is puzzling they say.
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Re: New EC Thread
Panda Tue 4 Sep - 11:40
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var ap_headline = "German minister: bank supervisor will take time ";
Sep 3, 9:50 AM EDT German minister: bank supervisor will take time By GEIR MOULSON Associated Press | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
BERLIN (AP) -- Germany's finance minister hit hopes that Europe's stressed banks could soon tap the region's rescue funds directly when he said Monday that a new Europe-wide banking supervisor is unlikely to be up and running in the new year. Meanwhile, Chancellor Angela Merkel called on Germans to show "solidarity" with those members of the 17-country bloc that uses the euro which are struggling with much-needed economic reforms. EU leaders agreed in June funds set up to bail out indebted governments could be allowed to funnel money directly to ailing banks - rather than via governments which would add to their debt burden - once an effective central bank supervision system is established. The idea is to assuage worries about the health of Europe's banking system, which is in danger of grinding to a halt as banks become increasingly wary of lending to one another. The European Commission will make proposals for a new supervisory system Sept. 12. Internal market commissioner Michel Barnier said last week he hopes it could be phased in starting next January and be extended to all banks in the eurozone at the beginning of 2014. Barnier also voiced hopes that banks could be helped directly from the (EURO)500 billion ($629 billion) European Stability Mechanism, Europe's planned permanent bailout fund, starting in January. However, German Finance Minister Wolfgang Schaeuble was skeptical about whether the new system would start work next year. "I think that's pretty unrealistic," he said on Deutschlandfunk radio. "I have my doubts that it will come so quickly, and so I think that once again expectations are being created here that can't be fulfilled, not even close," Schaeuble said. "That is always a reason for trouble and nervousness in the financial markets." Berlin and Brussels already appear at odds on the extent of the new supervisor's powers. Barnier has argued that all banks need to be supervised centrally by the European Central Bank; Germany argues that the supervisor should limit its focus to major banks whose stability is vital to Europe's financial security. Germany insists that, if the supervisory job is handed to the ECB, decision-making on banking supervision and monetary policy must be strictly separated. Merkel and her government have insisted that the key to resolving the eurozone's debt crisis is for struggling countries to cut their budget deficits and pursue structural reforms such as liberalizing labor markets. Berlin says aid can only be granted under those conditions - a point Merkel underlined in a speech Monday to supporters in a Bavarian beer tent, while also pleading for sympathy with countries undergoing painful changes. "We want a stability union in Europe, and the end of a debt union," she said. "Germany must set a good example and we must also - even if it is sometimes said that we are hard - push for reforms in these countries." "We have to say, you must make changes - we know from Germany that that's the only way things get better ... but I also say that, in such a difficult phase, these countries deserve our solidarity, that we want them to overcome these difficulties." Bailing out strugglers hasn't been popular in Germany, which is the biggest backer of the rescue efforts. The ECB is currently working on plans for a bond-buying program aimed at lowering the borrowing costs of debt-ridden governments including Spain and Italy. ECB President Mario Draghi is expected to detail a new approach after bank's governing council meets Thursday. Germany's national central bank, the Bundesbank, and its head, Jens Weidmann, oppose a big escalation in the ECB's bond-buying strategy. They argue it risks breaching the EU treaty provision barring the ECB from directly backing governments. Schaeuble stressed that the government respects the independence of the ECB and the Bundesbank. He cautioned against raising "wrong expectations" and expressed confidence that the ECB won't exceed its mandate. "There must be no decisions - we would consider them completely wrong, they would not be covered by the mandate of the European Central Bank, but the European Central Bank won't do that - that would amount to government debt being financed through monetary policy," he said. © 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed. Learn more about our Privacy Policy and Terms of Use. |
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Re: New EC Thread
Panda Tue 4 Sep - 11:51
Can someone please explain why I get all this gobbledegook on the AP Reports and CNN? I thought I had deleted them all before I pressed "send" and now find there is loads more.....it cracks me up!!!!! At one time I couldn't copy and paste pictures , which now I can without me doing anything, now it's this problem.
Feel free to PM me if you know what is causing it.
Feel free to PM me if you know what is causing it.
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Re: New EC Thread
Panda Tue 4 Sep - 12:36
Merkel, Monti Lead Diplomacy Intensifies; ECB in Focus
By Andrew Frye - Sep 4, 2012 10:31 AM GMT+0100
European leaders are stepping up shuttle diplomacy this week as details of a bond-buying plan emerged from the central bank, fueling gains in the euro and a surge in some Spanish and Italian debt.
European Union President Herman Van Rompuy traveled to Berlin for talks with German Chancellor Angela Merkel today as Italian Prime Minister Mario Monti hosts French PresidentFrancois Hollande in Rome. They were given a hint about what may be in store when European Central Bank President Mario Draghisaid yesterday he would be comfortable buying three-yeargovernment bonds to aid nations struggling to fund themselves.
Enlarge image
German Chancellor Angela Merkel
Peter Kneffel/AFP/Getty Images
German Chancellor Angela Merkel told members of her Bavarian Christian Social Union sister party in the town of Abensberg, northeast of Munich, “We need Europe, but we need a strong Europe.”
German Chancellor Angela Merkel told members of her Bavarian Christian Social Union sister party in the town of Abensberg, northeast of Munich, “We need Europe, but we need a strong Europe.” Photographer: Peter Kneffel/AFP/Getty Images
Enlarge image
Italy's Prime Minister Mario Monti
Jock Fistick/Bloomberg
Italy's Prime Minister Mario Monti, who raised taxes and cut spending to improve Italy’s finances, has shifted his focus to stimulating the stagnant economy and found an ally in Hollande.
Italy's Prime Minister Mario Monti, who raised taxes and cut spending to improve Italy’s finances, has shifted his focus to stimulating the stagnant economy and found an ally in Hollande. Photographer: Jock Fistick/Bloomberg
The stewards of the single currency, who have sparred as borrowing costs diverged in the 17 nation-euro area, have a chance to fall in line behind Draghi. Merkel, whose country shoulders the largest cost of bailing out weaker governments, has indicated she would back a more active crisis-fighting role at the ECB and yesterday told a crowd of beer drinkers in Bavaria that Germany must show solidarity with Europe.
“I think there is broad agreement among these people,”said Luca Jellinek, head of European interest-rate strategy at Credit Agricole Corporate & Investment Bank in London. “Many people are realizing that monetary policy is broken in Europe, badly broken.”
Outlook Cut
The euro traded near a two-month high against the dollar today, gaining 0.1 percent and adding 0.4 percent against the yen as of 10:47 a.m. in Rome. Italian and Spanish two-year yields dropped the most in about a month. In both countries, the two-year yield fell to the least on record relative to 10-year bonds.
Leaders are back from summer vacation and facing what Merkel called a “very ambitious agenda” this month to quell what has been a three-year sovereign debt crisis. Talks haven’t always gone smoothly, as Merkel and Monti clashed last week in Berlin over details while agreeing on the broad principles of collective action. Monti has pushed for flexibility on market intervention, while Merkel has focused on budget rigor.
“We have to press for reforms in other countries even if they sometimes say we’re hard-line,” Merkel said to a packed beer tent in the town of Abensberg, northeast of Munich. “It’s not enough just to keep muddling through. But I also say that in such a difficult phase these countries deserve our solidarity and that we root for them to overcome their difficulties.”
Bond Yields
Draghi told lawmakers in a closed-door meeting that purchasing short-dated bonds doesn’t constitute state financing, according to France’s Jean-Paul Gauzes, a member of the European Parliament from the European People’s Party. “He thinks it’s not a violation of the treaty and you can do it under the current legal framework,” Gauzes said. “He said for example three years is OK, 15 years no.”
Italian two-year yields fell 24 basis points to 2.39 percent, the lowest since March, while the yield on similar maturity Spanish debt declined 26 basis points to 3.2 percent. Italian 10-year bond yields declined 5 basis points to 5.72 percent, or 333 basis points more than the two-year note. German 10-year bond yields rose 4 basis points to 1.42 percent.
Draghi may give more details on the bank’s bond buying plans when he holds his first press conference after the summer break on Sept. 6. That day Monti will meet with European Commission President Jose Barroso, and Merkel will travel toMadrid to talk with Spanish Prime Minister Mariano Rajoy. Leaders are also awaiting a report from the so-called troika overseeing a Greek bailout, and a German court ruling on the constitutionality of the European Stability Mechanism, the region’s permanent bailout fund. That court case has delayed the start of the ESM, initially set for July.
German Finance Minister Wolfgang Schaeuble said yesterday he was “completely sure” the ESM will come into force.
German Support
Draghi still faces challenges in winning support among the German public for market intervention. Germany reiterated its support yesterday for Bundesbank President Jens Weidmann yesterday, following reports last week that he had considered resigning over his opposition to ECB bond purchases. Schaeuble warned investors not to expect too much from the ECB plan.
“We have to be very careful that we don’t raise false expectations,” Schaeuble told Deutschlandfunk radio yesterday.“It has to remain very clear, state debt can’t be financed through monetary policy. Therefore we can’t have a decision --we would think it very wrong -- that’s not covered by the ECB mandate.”
Monti, who raised taxes and cut spending to improve Italy’s finances, has shifted his focus to stimulating the stagnant economy and found an ally in Hollande. The French president is facing pressure at home following a summer break in which, according to a Viavoice poll, unemployment rose and his popularity fell seven points to 55 percent.
...........................................
Note, no gobbledegook on this post!!!! Very strange.
By Andrew Frye - Sep 4, 2012 10:31 AM GMT+0100
European leaders are stepping up shuttle diplomacy this week as details of a bond-buying plan emerged from the central bank, fueling gains in the euro and a surge in some Spanish and Italian debt.
European Union President Herman Van Rompuy traveled to Berlin for talks with German Chancellor Angela Merkel today as Italian Prime Minister Mario Monti hosts French PresidentFrancois Hollande in Rome. They were given a hint about what may be in store when European Central Bank President Mario Draghisaid yesterday he would be comfortable buying three-yeargovernment bonds to aid nations struggling to fund themselves.
Enlarge image
German Chancellor Angela Merkel
Peter Kneffel/AFP/Getty Images
German Chancellor Angela Merkel told members of her Bavarian Christian Social Union sister party in the town of Abensberg, northeast of Munich, “We need Europe, but we need a strong Europe.”
German Chancellor Angela Merkel told members of her Bavarian Christian Social Union sister party in the town of Abensberg, northeast of Munich, “We need Europe, but we need a strong Europe.” Photographer: Peter Kneffel/AFP/Getty Images
Enlarge image
Italy's Prime Minister Mario Monti
Jock Fistick/Bloomberg
Italy's Prime Minister Mario Monti, who raised taxes and cut spending to improve Italy’s finances, has shifted his focus to stimulating the stagnant economy and found an ally in Hollande.
Italy's Prime Minister Mario Monti, who raised taxes and cut spending to improve Italy’s finances, has shifted his focus to stimulating the stagnant economy and found an ally in Hollande. Photographer: Jock Fistick/Bloomberg
The stewards of the single currency, who have sparred as borrowing costs diverged in the 17 nation-euro area, have a chance to fall in line behind Draghi. Merkel, whose country shoulders the largest cost of bailing out weaker governments, has indicated she would back a more active crisis-fighting role at the ECB and yesterday told a crowd of beer drinkers in Bavaria that Germany must show solidarity with Europe.
“I think there is broad agreement among these people,”said Luca Jellinek, head of European interest-rate strategy at Credit Agricole Corporate & Investment Bank in London. “Many people are realizing that monetary policy is broken in Europe, badly broken.”
Outlook Cut
The euro traded near a two-month high against the dollar today, gaining 0.1 percent and adding 0.4 percent against the yen as of 10:47 a.m. in Rome. Italian and Spanish two-year yields dropped the most in about a month. In both countries, the two-year yield fell to the least on record relative to 10-year bonds.
Leaders are back from summer vacation and facing what Merkel called a “very ambitious agenda” this month to quell what has been a three-year sovereign debt crisis. Talks haven’t always gone smoothly, as Merkel and Monti clashed last week in Berlin over details while agreeing on the broad principles of collective action. Monti has pushed for flexibility on market intervention, while Merkel has focused on budget rigor.
“We have to press for reforms in other countries even if they sometimes say we’re hard-line,” Merkel said to a packed beer tent in the town of Abensberg, northeast of Munich. “It’s not enough just to keep muddling through. But I also say that in such a difficult phase these countries deserve our solidarity and that we root for them to overcome their difficulties.”
Bond Yields
Draghi told lawmakers in a closed-door meeting that purchasing short-dated bonds doesn’t constitute state financing, according to France’s Jean-Paul Gauzes, a member of the European Parliament from the European People’s Party. “He thinks it’s not a violation of the treaty and you can do it under the current legal framework,” Gauzes said. “He said for example three years is OK, 15 years no.”
Italian two-year yields fell 24 basis points to 2.39 percent, the lowest since March, while the yield on similar maturity Spanish debt declined 26 basis points to 3.2 percent. Italian 10-year bond yields declined 5 basis points to 5.72 percent, or 333 basis points more than the two-year note. German 10-year bond yields rose 4 basis points to 1.42 percent.
Draghi may give more details on the bank’s bond buying plans when he holds his first press conference after the summer break on Sept. 6. That day Monti will meet with European Commission President Jose Barroso, and Merkel will travel toMadrid to talk with Spanish Prime Minister Mariano Rajoy. Leaders are also awaiting a report from the so-called troika overseeing a Greek bailout, and a German court ruling on the constitutionality of the European Stability Mechanism, the region’s permanent bailout fund. That court case has delayed the start of the ESM, initially set for July.
German Finance Minister Wolfgang Schaeuble said yesterday he was “completely sure” the ESM will come into force.
German Support
Draghi still faces challenges in winning support among the German public for market intervention. Germany reiterated its support yesterday for Bundesbank President Jens Weidmann yesterday, following reports last week that he had considered resigning over his opposition to ECB bond purchases. Schaeuble warned investors not to expect too much from the ECB plan.
“We have to be very careful that we don’t raise false expectations,” Schaeuble told Deutschlandfunk radio yesterday.“It has to remain very clear, state debt can’t be financed through monetary policy. Therefore we can’t have a decision --we would think it very wrong -- that’s not covered by the ECB mandate.”
Monti, who raised taxes and cut spending to improve Italy’s finances, has shifted his focus to stimulating the stagnant economy and found an ally in Hollande. The French president is facing pressure at home following a summer break in which, according to a Viavoice poll, unemployment rose and his popularity fell seven points to 55 percent.
...........................................
Note, no gobbledegook on this post!!!! Very strange.
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Re: New EC Thread
Panda Tue 4 Sep - 15:47
It is becoming quite obvious that the Euro Countries needing help are split , Hollande and Monti are to meet in Rome,
Merkel is to meet Rumpoy, Merkel then to fly to Greece.
Fitch says the fragmentation of the Euro Countries is very apparent and the Senior leaders unable to make decisions because Merkel and Draghi have such differing views on how to address the crisis.
Traders are split on the Euro . strategists say the cheaper 3 yr Bonds which Draghi proposes will debase the currency.
Merkel cannot be so obstinate in the middle of a World recession to demand more austerity , Greece, Spain and Italy are notorious for the very wealthy not paying their taxes and this will take a long time to resolve. Investors say that 2 yr Bonds will do little to help the Countries because the recession will hardly be turned around in 2 years . they said 10 yr Bonds should be issued , but that may not be allowed according to the ECB remit.
Germany is adamant it will not lend any more money to Greece and since Merkel faces an election next year she has to
tread carefully. The ratification of the ESF fund being used to help those Countries in trouble is due to be signed on 12th September.
A Professor of a financial Institute says the ECB and Federal Bank have become far too politicised and this is very worrying.
Merkel is to meet Rumpoy, Merkel then to fly to Greece.
Fitch says the fragmentation of the Euro Countries is very apparent and the Senior leaders unable to make decisions because Merkel and Draghi have such differing views on how to address the crisis.
Traders are split on the Euro . strategists say the cheaper 3 yr Bonds which Draghi proposes will debase the currency.
Merkel cannot be so obstinate in the middle of a World recession to demand more austerity , Greece, Spain and Italy are notorious for the very wealthy not paying their taxes and this will take a long time to resolve. Investors say that 2 yr Bonds will do little to help the Countries because the recession will hardly be turned around in 2 years . they said 10 yr Bonds should be issued , but that may not be allowed according to the ECB remit.
Germany is adamant it will not lend any more money to Greece and since Merkel faces an election next year she has to
tread carefully. The ratification of the ESF fund being used to help those Countries in trouble is due to be signed on 12th September.
A Professor of a financial Institute says the ECB and Federal Bank have become far too politicised and this is very worrying.
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Re: New EC Thread
Panda Tue 4 Sep - 17:50
André Glucksmann: Europe let down by its intellectuals
4 September 2012Der Spiegel Hamburg
Beppe Giacobbe
In the throes of a crisis of confidence, Europe now has to contend with question of its democratic legitimacy. Given this context, French intellectual André Glucksmann argues for greater solidarity within the EU, and a community that takes the initiative in response to external challenges.
Romain Leick
SPIEGEL: The EU hasn't lost its appeal. No one is voluntarily leaving the euro zone.
Glucksmann: Socrates said that no one willingly does wrong. I interpret this as follows: Bad things happen when the will grows weak. It doesn't seem to me that finding solutions and paths in the current financial crisis is a superhuman task. After all, the EU's leaders keep finding them here and there.
SPIEGEL: And they're finding their way from one Brussels summit to the next, and at increasingly shorter intervals. But what are supposed to be solutions just don't pan out.
Glucksmann: What's missing is a global perspective. The why of the European Union, its raison d'être, has been lost. There will always be ways to improve the EU institutions and adjust them to the needs of the situation. We can rely on the resourcefulness of politicians and lawyers to do this. The challenge appears at a different level, and it's clearly a matter of survival: If the old European nations don't unite and present a unified front, they will perish.
SPIEGEL: But haven't European leaders recognized this?
Glucksmann: If they have, why are they acting with so little unity? The question of size has become an absolute necessity in globalization. Mrs. Merkel undoubtedly senses that Germany's fate will also be decided in Europe's backyard. That's why, after some hesitation, she chose solidarity, albeit in moderation. Nevertheless, she is also allowing Germany, France, Italy and Spain to become divided in the crisis. If our countries can become divided under the pressure of market forces, they will perish, both individually and jointly.
SPIEGEL: Are you saying that the idea of a European community of fate hasn't really taken hold yet?
Glucksmann: Not in practice. Globalization brings global chaos, and a global police force -- which the United States played for a long time -- no longer exists. The players may not be keen on war, but they don't exactly mean well by one another. Everyone is playing his own game. In this anarchic confusion, Europe has to assert itself and face up to threats offensively. Putin's Russia, which wants to regain parts of what it lost, is a threat. China, a bureaucratic slave state, is a threat. Militant Islamism is a threat. Europe has to learn to think in terms of hostility once again. (German philosopher) Jürgen Habermas, for example, doesn't see this when he says that well-intentioned cosmopolitanism can unite everyone in global citizenship.
SPIEGEL: For many parts of the world, Europe is a beacon of freedom and human rights.
Glucksmann: But ideals and values don't combine to form prospects. European nations can certainly have an attractive pluralism of values, but presenting them as if they were part of a catalog isn't sufficient. Instead, it's important to address the challenges together. Europe is lingering in a state of hesitation, which can sometimes turn into hypocrisy. There are two ways to avoid challenges: One is to look away and pretend they don't exist. The other is fatalism, that is, helplessly shrugging one's shoulders and pretending that nothing can be done about them, anyway. The great universal historian Arnold J. Toynbee evaluated the development of cultures on the basis of their ability to appropriately react to challenges. Is Europe willing to confront its fate? There is reason to doubt it.
SPIEGEL: Does this result from a lack of leadership?
Glucksmann: It's more than that. It's also a question of the failure of intellectuals, indifference in public opinion and isolationism. Look at the elections in Europe. What role do foreign policy and Europe's place in the world play? A few years ago, the EU gave itself a high representative for foreign affairs and security policy, Catherine Ashton, with a separate agency employing several thousand civil servants. Where is she, what is she doing and who notices her? The 21st century will be the century of big continents that will either get along with each other or not. If Europe doesn't enter this dimension, it will fall back into the 19th century. Then our political activity will only be based on distant memories: Europe, the continent of anguish and nostalgia.
Read the rest of this interview at Spiegel Online International…
4 September 2012Der Spiegel Hamburg
Beppe Giacobbe
In the throes of a crisis of confidence, Europe now has to contend with question of its democratic legitimacy. Given this context, French intellectual André Glucksmann argues for greater solidarity within the EU, and a community that takes the initiative in response to external challenges.
Romain Leick
SPIEGEL: The EU hasn't lost its appeal. No one is voluntarily leaving the euro zone.
Glucksmann: Socrates said that no one willingly does wrong. I interpret this as follows: Bad things happen when the will grows weak. It doesn't seem to me that finding solutions and paths in the current financial crisis is a superhuman task. After all, the EU's leaders keep finding them here and there.
SPIEGEL: And they're finding their way from one Brussels summit to the next, and at increasingly shorter intervals. But what are supposed to be solutions just don't pan out.
Glucksmann: What's missing is a global perspective. The why of the European Union, its raison d'être, has been lost. There will always be ways to improve the EU institutions and adjust them to the needs of the situation. We can rely on the resourcefulness of politicians and lawyers to do this. The challenge appears at a different level, and it's clearly a matter of survival: If the old European nations don't unite and present a unified front, they will perish.
SPIEGEL: But haven't European leaders recognized this?
Glucksmann: If they have, why are they acting with so little unity? The question of size has become an absolute necessity in globalization. Mrs. Merkel undoubtedly senses that Germany's fate will also be decided in Europe's backyard. That's why, after some hesitation, she chose solidarity, albeit in moderation. Nevertheless, she is also allowing Germany, France, Italy and Spain to become divided in the crisis. If our countries can become divided under the pressure of market forces, they will perish, both individually and jointly.
SPIEGEL: Are you saying that the idea of a European community of fate hasn't really taken hold yet?
Glucksmann: Not in practice. Globalization brings global chaos, and a global police force -- which the United States played for a long time -- no longer exists. The players may not be keen on war, but they don't exactly mean well by one another. Everyone is playing his own game. In this anarchic confusion, Europe has to assert itself and face up to threats offensively. Putin's Russia, which wants to regain parts of what it lost, is a threat. China, a bureaucratic slave state, is a threat. Militant Islamism is a threat. Europe has to learn to think in terms of hostility once again. (German philosopher) Jürgen Habermas, for example, doesn't see this when he says that well-intentioned cosmopolitanism can unite everyone in global citizenship.
SPIEGEL: For many parts of the world, Europe is a beacon of freedom and human rights.
Glucksmann: But ideals and values don't combine to form prospects. European nations can certainly have an attractive pluralism of values, but presenting them as if they were part of a catalog isn't sufficient. Instead, it's important to address the challenges together. Europe is lingering in a state of hesitation, which can sometimes turn into hypocrisy. There are two ways to avoid challenges: One is to look away and pretend they don't exist. The other is fatalism, that is, helplessly shrugging one's shoulders and pretending that nothing can be done about them, anyway. The great universal historian Arnold J. Toynbee evaluated the development of cultures on the basis of their ability to appropriately react to challenges. Is Europe willing to confront its fate? There is reason to doubt it.
SPIEGEL: Does this result from a lack of leadership?
Glucksmann: It's more than that. It's also a question of the failure of intellectuals, indifference in public opinion and isolationism. Look at the elections in Europe. What role do foreign policy and Europe's place in the world play? A few years ago, the EU gave itself a high representative for foreign affairs and security policy, Catherine Ashton, with a separate agency employing several thousand civil servants. Where is she, what is she doing and who notices her? The 21st century will be the century of big continents that will either get along with each other or not. If Europe doesn't enter this dimension, it will fall back into the 19th century. Then our political activity will only be based on distant memories: Europe, the continent of anguish and nostalgia.
Read the rest of this interview at Spiegel Online International…
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Re: New EC Thread
Panda Tue 4 Sep - 20:31
Euro Weakens From Almost Two-Month High Amid ECB Views
By Allison Bennett - Sep 4, 2012 6:49 PM GMT+0100
The euro weakened versus most of its major counterparts amid concern policy measures from theEuropean Central Bank may not be enough to contain the region’s debt crisis.
The 17-nation currency declined from almost a two-month high against the dollar as ECB President Mario Draghi said the central bank would be willing to buy bonds of maturities as longs as three years. The U.S. currency gained as global stocks and commodities fell even after a report showed manufacturing in the U.S. contracted for a third month, adding to speculation theFederal Reserve will announce another round of monetary easing.
Enlarge image
Yen Is Near 5-Week Highs Versus Aussie, Kiwi on Slowdown Concern
Kiyoshi Ota/Bloomberg
The yen traded at 80.22 per Australian dollar at 8:21 a.m. in Tokyo from 80.18 at the close yesterday, when it climbed to 80.07, the strongest since July 25.
The yen traded at 80.22 per Australian dollar at 8:21 a.m. in Tokyo from 80.18 at the close yesterday, when it climbed to 80.07, the strongest since July 25. Photographer: Kiyoshi Ota/Bloomberg
5:29
Aug. 14 (Bloomberg) -- Thomas Kressin, head of European foreign exchange at Pacific Investment Management Co., discusses capital outflows from the euro zone. He speaks from Munich with Manus Cranny on Bloomberg Television's "Last Word." (Source: Bloomberg)
“It’s not a popular view that Draghi would go back on his commitments from the previous meeting, so most people are anticipating what he will say,” said Alan Ruskin, global head of Group-of-10 foreign-exchange strategy at Deutsche Bank AG in New York. “I now think the big event of the week is Friday, with U.S. payroll data pushing the Fed toward a decision.”
The euro fell 0.2 percent to $1.2563 at 1:45 p.m. New York time, after climbing to $1.2638 on Aug. 31, the strongest since July 2. The shared currency was little changed at 98.51 yen, after appreciating to 99.03 yen on Aug. 31, the strongest since Aug. 21. The yen fell 0.2 percent to 78.41 per dollar.
Euro Sale
“You sell the euro; there’s a lot already priced in and we pretty much know what the ECB is going to do,” Sebastien Galy, a senior foreign-exchange strategist at Societe Generale SA in New York, said in an interview on Bloomberg Television’s “Lunch Money” with Sara Eisen. “They’re probably going to purchase bonds in the two-year area, conditional on Spain asking for help.”
The euro has dropped 4.1 percent this year, the worst performance among 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The yen declined 2.8 percent, and the dollar weakened 0.7 percent.
The common currency faces “good resistance” in the $1.2684-to-$1.2692 range, Tom Fitzpatrick and Shyam Devani, technical strategists at Citigroup Global Markets, wrote today in a research note.
The Dollar Index (DXY) rose 0.2 percent to 81.359 as theInstitute for Supply Management’s factory index fell to 49.6 last month, the lowest since July 2009, from 49.8 in July, the Tempe, Arizona-based group said today.
Jobs Data
The U.S. economy added 120,000 payroll jobs in August, according to the median estimate in a Bloomberg News survey of 83 economists before the Labor Department report Sept. 7. That compared with an increase of 163,000 jobs in July.
The Standard & Poor’s 500 Index dropped 0.4 percent, while the MSCI World Index of stocks fell 0.7 percent.
Australia’s dollar fell 0.2 percent against its U.S. counterpart after gaining as much as 0.4 percent. The central bank kept its overnight cash-rate target at 3.5 percent. It earlier fell to $1.0224, the weakest level since July 25. The Aussie was little changed at 80.17 yen after sliding 0.9 percent yesterday.
The nation’s economy expanded 0.7 percent in the second quarter from the previous three months for the strongest first half of growth since 2007, a Bloomberg News survey showed before a government report tomorrow.
New Zealand’s dollar tumbled against the greenback even as the nation posted its first gain in commodity export prices since January. The so-called kiwi fell 0.5 percent to 79.36 U.S. cents and declined 0.3 percent to 62.23 yen.
ECB Plan
Draghi said yesterday the bank’s primary mandate compels it to intervene in bond markets to wrest back control of interest rates and ensure the euro’s survival. The ECB announces its next policy decision on Sept. 6.
Mounting his strongest case yet for ECB bond purchases, Draghi told lawmakers in a closed-door session at the European Parliament in Brussels that the bank has lost control of borrowing costs in the 17-nation monetary union. Bloomberg News obtained a recording of his comments, some of which were published by Italian news agency AGI yesterday.
There are growing “expectations for some kind of ECB bond-buying intervention,” said Eimear Daly, a currency analyst at Monex Europe in London. “Everyone is completely fixated on the bond-buying plan.”
European Union President Herman Van Rompuy traveled to Berlin for talks with German Chancellor Angela Merkel today as Italian Prime Minister Mario Monti hosts French PresidentFrancois Hollande in Rome.
Traders and strategists are more divided than at any time since 2011 over whether officials will be able to keep the currency from tumbling, according to data compiled by Bloomberg.
At about $1.26, the euro is 3.3 percent above the $1.22 median year-end estimate of more than 50 analysts, after the gap expanded to 3.8 percent last week. The last time the euro exceeded the consensus by that much was in July 2011, and it tumbled 9.4 percent in the next 10 weeks.
By Allison Bennett - Sep 4, 2012 6:49 PM GMT+0100
The euro weakened versus most of its major counterparts amid concern policy measures from theEuropean Central Bank may not be enough to contain the region’s debt crisis.
The 17-nation currency declined from almost a two-month high against the dollar as ECB President Mario Draghi said the central bank would be willing to buy bonds of maturities as longs as three years. The U.S. currency gained as global stocks and commodities fell even after a report showed manufacturing in the U.S. contracted for a third month, adding to speculation theFederal Reserve will announce another round of monetary easing.
Enlarge image
Yen Is Near 5-Week Highs Versus Aussie, Kiwi on Slowdown Concern
Kiyoshi Ota/Bloomberg
The yen traded at 80.22 per Australian dollar at 8:21 a.m. in Tokyo from 80.18 at the close yesterday, when it climbed to 80.07, the strongest since July 25.
The yen traded at 80.22 per Australian dollar at 8:21 a.m. in Tokyo from 80.18 at the close yesterday, when it climbed to 80.07, the strongest since July 25. Photographer: Kiyoshi Ota/Bloomberg
5:29
Aug. 14 (Bloomberg) -- Thomas Kressin, head of European foreign exchange at Pacific Investment Management Co., discusses capital outflows from the euro zone. He speaks from Munich with Manus Cranny on Bloomberg Television's "Last Word." (Source: Bloomberg)
“It’s not a popular view that Draghi would go back on his commitments from the previous meeting, so most people are anticipating what he will say,” said Alan Ruskin, global head of Group-of-10 foreign-exchange strategy at Deutsche Bank AG in New York. “I now think the big event of the week is Friday, with U.S. payroll data pushing the Fed toward a decision.”
The euro fell 0.2 percent to $1.2563 at 1:45 p.m. New York time, after climbing to $1.2638 on Aug. 31, the strongest since July 2. The shared currency was little changed at 98.51 yen, after appreciating to 99.03 yen on Aug. 31, the strongest since Aug. 21. The yen fell 0.2 percent to 78.41 per dollar.
Euro Sale
“You sell the euro; there’s a lot already priced in and we pretty much know what the ECB is going to do,” Sebastien Galy, a senior foreign-exchange strategist at Societe Generale SA in New York, said in an interview on Bloomberg Television’s “Lunch Money” with Sara Eisen. “They’re probably going to purchase bonds in the two-year area, conditional on Spain asking for help.”
The euro has dropped 4.1 percent this year, the worst performance among 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The yen declined 2.8 percent, and the dollar weakened 0.7 percent.
The common currency faces “good resistance” in the $1.2684-to-$1.2692 range, Tom Fitzpatrick and Shyam Devani, technical strategists at Citigroup Global Markets, wrote today in a research note.
The Dollar Index (DXY) rose 0.2 percent to 81.359 as theInstitute for Supply Management’s factory index fell to 49.6 last month, the lowest since July 2009, from 49.8 in July, the Tempe, Arizona-based group said today.
Jobs Data
The U.S. economy added 120,000 payroll jobs in August, according to the median estimate in a Bloomberg News survey of 83 economists before the Labor Department report Sept. 7. That compared with an increase of 163,000 jobs in July.
The Standard & Poor’s 500 Index dropped 0.4 percent, while the MSCI World Index of stocks fell 0.7 percent.
Australia’s dollar fell 0.2 percent against its U.S. counterpart after gaining as much as 0.4 percent. The central bank kept its overnight cash-rate target at 3.5 percent. It earlier fell to $1.0224, the weakest level since July 25. The Aussie was little changed at 80.17 yen after sliding 0.9 percent yesterday.
The nation’s economy expanded 0.7 percent in the second quarter from the previous three months for the strongest first half of growth since 2007, a Bloomberg News survey showed before a government report tomorrow.
New Zealand’s dollar tumbled against the greenback even as the nation posted its first gain in commodity export prices since January. The so-called kiwi fell 0.5 percent to 79.36 U.S. cents and declined 0.3 percent to 62.23 yen.
ECB Plan
Draghi said yesterday the bank’s primary mandate compels it to intervene in bond markets to wrest back control of interest rates and ensure the euro’s survival. The ECB announces its next policy decision on Sept. 6.
Mounting his strongest case yet for ECB bond purchases, Draghi told lawmakers in a closed-door session at the European Parliament in Brussels that the bank has lost control of borrowing costs in the 17-nation monetary union. Bloomberg News obtained a recording of his comments, some of which were published by Italian news agency AGI yesterday.
There are growing “expectations for some kind of ECB bond-buying intervention,” said Eimear Daly, a currency analyst at Monex Europe in London. “Everyone is completely fixated on the bond-buying plan.”
European Union President Herman Van Rompuy traveled to Berlin for talks with German Chancellor Angela Merkel today as Italian Prime Minister Mario Monti hosts French PresidentFrancois Hollande in Rome.
Traders and strategists are more divided than at any time since 2011 over whether officials will be able to keep the currency from tumbling, according to data compiled by Bloomberg.
At about $1.26, the euro is 3.3 percent above the $1.22 median year-end estimate of more than 50 analysts, after the gap expanded to 3.8 percent last week. The last time the euro exceeded the consensus by that much was in July 2011, and it tumbled 9.4 percent in the next 10 weeks.
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Re: New EC Thread
Panda Wed 5 Sep - 7:05
EU Outlook Cut by Moody’s on Germany, France, U.K. Risks
By Michael Heath and John Glover - Sep 4, 2012 10:50 AM GMT+0100
The European Union’s rating outlook was cut to negative by Moody’s Investors Service, reflecting the risks to Germany, France, the U.K. and the Netherlands that account for about 45 percent of the group’s budget revenue.
The ratings company lowered the outlook on the EU’s Aaa long-term bond rating from stable, according to a statement released in Frankfurt late yesterday. It also changed to negative from stable its outlook on the provisional Aaa rating for the EU’s medium-term note program.
Enlarge image
German Chancellor Angela Merkel
Dimas Ardian/Bloomberg
Angela Merkel, Germany's chancellor.
Angela Merkel, Germany's chancellor. Photographer: Dimas Ardian/Bloomberg
The change “reflects the negative outlook on the Aaa ratings of the member states with large contributions to the EU budget,” Moody’s said. “The creditworthiness of these member states is highly correlated, as they are all exposed, albeit to varying degrees, to the euro-area debt crisis.”
Ratings of European nations have declined under the sovereign debt crisis and Spain, which held the top Aaa rating from Moody’s between 2001 and 2010, is now on the cusp of junk at Baa3. Those same stresses have hurt the creditworthiness of EU member states that still have top ratings, thanks to their stronger economies or, as in the case of the U.K., being outside the euro region.
Risks of a downgrade to the EU’s sovereign debt rating come from a “deterioration in the creditworthiness of EU member states,” Moody’s said. “Additionally, a weakening of the commitment of the member states to the EU and changes to the EU’s fiscal framework that led to less conservative budget management would be credit negative.”
Draghi’s Plan
Chancellor Angela Merkel told a crowd of beer drinkers in Bavaria yesterday that Germany must show solidarity with Europe, and indicated she would back a more active crisis-fighting role at the European Central Bank. Her nation shoulders the largest cost of bailing out weaker governments.
ECB President Mario Draghi told officials yesterday he intends buying government bonds with maturities as much as three years away to bring down borrowing costs for nations in financial distress.
The European Commission, the EU’s executive arm, borrows on behalf of the EU, which has 52.7 billion euros of bonds outstanding, data compiled by Bloomberg show. About 10.7 billion euros of notes come due before the end of 2015, the data show.
The yield premium investors demand to hold the EU’s 4.75 billion euros of 2.75 percent bonds due June 2016 rather than similar-maturity German bonds narrowed 5.2 basis points to 30.4 basis points, according to Bloomberg Bond Trader prices.
Ratings Outlook
“The outlook for the EU’s ratings could return to stable if the outlooks on the ratings of the key Aaa countries with contributions to the EU budget also returned to stable,”Moody’s said of the 27-member group.
European leaders are stepping up shuttle diplomacy this week as they brace for Draghi’s plan to defend the euro from bond-market turmoil. EU President Herman Van Rompuy is traveling to Berlin for talks with Merkel today as Italian Prime MinisterMario Monti welcomes French President Francois Hollande to Rome.
The yield on Italian 10-year bonds declined 5 basis points today to 5.72 percent. That was still 431 basis points more than the yield on similar maturity German bunds. Reports of Draghi’s plan to buy bonds due in as much as three years helped push down yields on Italian two-year notes to the least on record relative to rates on the 10-year notes.
Wider Spread
The spread between the two securities increased more than 20 basis points to 337 basis points today, the most since Bloomberg began compiling the data in 1993.
The spread between Spain’s two- and 10-year bonds also climbed, rising to a record 351 basis points, the data show. The country’s 10-year notes yield 6.72 percent.
Draghi faces challenges in winning support among the German public for market intervention. Germany reiterated its support yesterday for Bundesbank President Jens Weidmann, following reports last week that he had considered resigning over his opposition to ECB bond purchases.
“Moody’s believes that it is reasonable to assume the same probability of default by the EU on its debt obligations as the highest rated key members states’ probability of default,”according to the statement. “Whereas Moody’s acknowledges that there are structural features in place that enhance the EU’s creditworthiness, they are in Moody’s view not sufficient to delink the EU’s ratings from the ratings of its strongest key member states.”
By Michael Heath and John Glover - Sep 4, 2012 10:50 AM GMT+0100
The European Union’s rating outlook was cut to negative by Moody’s Investors Service, reflecting the risks to Germany, France, the U.K. and the Netherlands that account for about 45 percent of the group’s budget revenue.
The ratings company lowered the outlook on the EU’s Aaa long-term bond rating from stable, according to a statement released in Frankfurt late yesterday. It also changed to negative from stable its outlook on the provisional Aaa rating for the EU’s medium-term note program.
Enlarge image
German Chancellor Angela Merkel
Dimas Ardian/Bloomberg
Angela Merkel, Germany's chancellor.
Angela Merkel, Germany's chancellor. Photographer: Dimas Ardian/Bloomberg
The change “reflects the negative outlook on the Aaa ratings of the member states with large contributions to the EU budget,” Moody’s said. “The creditworthiness of these member states is highly correlated, as they are all exposed, albeit to varying degrees, to the euro-area debt crisis.”
Ratings of European nations have declined under the sovereign debt crisis and Spain, which held the top Aaa rating from Moody’s between 2001 and 2010, is now on the cusp of junk at Baa3. Those same stresses have hurt the creditworthiness of EU member states that still have top ratings, thanks to their stronger economies or, as in the case of the U.K., being outside the euro region.
Risks of a downgrade to the EU’s sovereign debt rating come from a “deterioration in the creditworthiness of EU member states,” Moody’s said. “Additionally, a weakening of the commitment of the member states to the EU and changes to the EU’s fiscal framework that led to less conservative budget management would be credit negative.”
Draghi’s Plan
Chancellor Angela Merkel told a crowd of beer drinkers in Bavaria yesterday that Germany must show solidarity with Europe, and indicated she would back a more active crisis-fighting role at the European Central Bank. Her nation shoulders the largest cost of bailing out weaker governments.
ECB President Mario Draghi told officials yesterday he intends buying government bonds with maturities as much as three years away to bring down borrowing costs for nations in financial distress.
The European Commission, the EU’s executive arm, borrows on behalf of the EU, which has 52.7 billion euros of bonds outstanding, data compiled by Bloomberg show. About 10.7 billion euros of notes come due before the end of 2015, the data show.
The yield premium investors demand to hold the EU’s 4.75 billion euros of 2.75 percent bonds due June 2016 rather than similar-maturity German bonds narrowed 5.2 basis points to 30.4 basis points, according to Bloomberg Bond Trader prices.
Ratings Outlook
“The outlook for the EU’s ratings could return to stable if the outlooks on the ratings of the key Aaa countries with contributions to the EU budget also returned to stable,”Moody’s said of the 27-member group.
European leaders are stepping up shuttle diplomacy this week as they brace for Draghi’s plan to defend the euro from bond-market turmoil. EU President Herman Van Rompuy is traveling to Berlin for talks with Merkel today as Italian Prime MinisterMario Monti welcomes French President Francois Hollande to Rome.
The yield on Italian 10-year bonds declined 5 basis points today to 5.72 percent. That was still 431 basis points more than the yield on similar maturity German bunds. Reports of Draghi’s plan to buy bonds due in as much as three years helped push down yields on Italian two-year notes to the least on record relative to rates on the 10-year notes.
Wider Spread
The spread between the two securities increased more than 20 basis points to 337 basis points today, the most since Bloomberg began compiling the data in 1993.
The spread between Spain’s two- and 10-year bonds also climbed, rising to a record 351 basis points, the data show. The country’s 10-year notes yield 6.72 percent.
Draghi faces challenges in winning support among the German public for market intervention. Germany reiterated its support yesterday for Bundesbank President Jens Weidmann, following reports last week that he had considered resigning over his opposition to ECB bond purchases.
“Moody’s believes that it is reasonable to assume the same probability of default by the EU on its debt obligations as the highest rated key members states’ probability of default,”according to the statement. “Whereas Moody’s acknowledges that there are structural features in place that enhance the EU’s creditworthiness, they are in Moody’s view not sufficient to delink the EU’s ratings from the ratings of its strongest key member states.”
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Re: New EC Thread
Panda Wed 5 Sep - 7:26
Euro Remains Lower Against Most Peers Before ECB Meets
By Mariko Ishikawa and Monami Yui - Sep 5, 2012 6:34 AM GMT+0100
The euro fell for second day before the European Central Bank meets tomorrow to discuss measures to tackle the region’s debt crisis.
ECB President Mario Draghi told lawmakers in a closed-door session in Brussels this week the bank’s primary mandate compels it to intervene in bond markets to ensure the euro’s survival. The 17-nation currency remained lower versus most of its major counterparts before data forecast to show retail sales declined and services contracted in the euro area. The Australian dollar touched a six-week low after the government reported second-quarter gross domestic product grew less than analysts expected.
Enlarge image
European Central Bank President Mario Draghi
Hannelore Foerster/Bloomberg
Mario Draghi, president of the European Central Bank (ECB).
Mario Draghi, president of the European Central Bank (ECB). Photographer: Hannelore Foerster/Bloomberg
8:20
Sept. 4 (Bloomberg) -- Charles Calomiris, a professor at Columbia Business School, talks about the outlook for the 2012 U.S. presidential election and Federal Reserve and European Central Bank policies. He speaks with Stephanie Ruhle and Erik Schatzker on Bloomberg Television's "Market Makers." (Source: Bloomberg)
“A lot of expectations have been built into the ECB meeting since President Draghi’s comments,” said Yuki Sakasai, a currency strategist at Barclays Plc in New York. “There’s a risk of a disappointment, so the euro may face some downward pressure into the meeting.”
The euro fell 0.3 percent to $1.2529 as of 6:21 a.m. inLondon from yesterday when it declined 0.2 percent. It climbed to $1.2638 on Aug. 31, the strongest since July 2. The shared currency dropped 0.4 percent to 98.21 yen. The yen was little changed at 78.39 per dollar.
ECB President Draghi said Sept. 3 that the bank has lost control of borrowing costs in the monetary union, according to a recording of his comments obtained by Bloomberg News. Bond purchases are “a way to comply with our primary mandate,”Draghi said, adding: “Frankly, all this also has to do very much with the continuing existence of the euro.” The central bank announces its next policy decision tomorrow.
ESM Ruling
Germany’s Constitutional Court is set to rule on the legality of the European Stability Mechanism, the region’s permanent bailout fund, on Sept. 12. The ECB may delay giving full details of Draghi’s bond-buying plan until after the ruling, two central bank officials who spoke on condition of anonymity, said on Aug. 24.
“Ahead of the German Constitutional Court ruling, I’m not sure if the ECB can deliver all that they want to,” said Robert Rennie, chief currency strategist at Westpac Banking Corp. in Sydney. “The dollar is finding some support. It’s difficult to see a clear picture ahead of risk events.”
By Mariko Ishikawa and Monami Yui - Sep 5, 2012 6:34 AM GMT+0100
The euro fell for second day before the European Central Bank meets tomorrow to discuss measures to tackle the region’s debt crisis.
ECB President Mario Draghi told lawmakers in a closed-door session in Brussels this week the bank’s primary mandate compels it to intervene in bond markets to ensure the euro’s survival. The 17-nation currency remained lower versus most of its major counterparts before data forecast to show retail sales declined and services contracted in the euro area. The Australian dollar touched a six-week low after the government reported second-quarter gross domestic product grew less than analysts expected.
Enlarge image
European Central Bank President Mario Draghi
Hannelore Foerster/Bloomberg
Mario Draghi, president of the European Central Bank (ECB).
Mario Draghi, president of the European Central Bank (ECB). Photographer: Hannelore Foerster/Bloomberg
8:20
Sept. 4 (Bloomberg) -- Charles Calomiris, a professor at Columbia Business School, talks about the outlook for the 2012 U.S. presidential election and Federal Reserve and European Central Bank policies. He speaks with Stephanie Ruhle and Erik Schatzker on Bloomberg Television's "Market Makers." (Source: Bloomberg)
“A lot of expectations have been built into the ECB meeting since President Draghi’s comments,” said Yuki Sakasai, a currency strategist at Barclays Plc in New York. “There’s a risk of a disappointment, so the euro may face some downward pressure into the meeting.”
The euro fell 0.3 percent to $1.2529 as of 6:21 a.m. inLondon from yesterday when it declined 0.2 percent. It climbed to $1.2638 on Aug. 31, the strongest since July 2. The shared currency dropped 0.4 percent to 98.21 yen. The yen was little changed at 78.39 per dollar.
ECB President Draghi said Sept. 3 that the bank has lost control of borrowing costs in the monetary union, according to a recording of his comments obtained by Bloomberg News. Bond purchases are “a way to comply with our primary mandate,”Draghi said, adding: “Frankly, all this also has to do very much with the continuing existence of the euro.” The central bank announces its next policy decision tomorrow.
ESM Ruling
Germany’s Constitutional Court is set to rule on the legality of the European Stability Mechanism, the region’s permanent bailout fund, on Sept. 12. The ECB may delay giving full details of Draghi’s bond-buying plan until after the ruling, two central bank officials who spoke on condition of anonymity, said on Aug. 24.
“Ahead of the German Constitutional Court ruling, I’m not sure if the ECB can deliver all that they want to,” said Robert Rennie, chief currency strategist at Westpac Banking Corp. in Sydney. “The dollar is finding some support. It’s difficult to see a clear picture ahead of risk events.”
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Re: New EC Thread
Panda Wed 5 Sep - 10:51
As part of it's austerity plan Greece is to cut pensions to 100 Euros per months. A Pensioner interviewed asked how anyone could be expected to live on that.
The Finnish economy contracts as global, including European, recession bitesand threatens their AAA Bank status.
The Troika returns to Greece to scrutinize the austerity measures meet requirements.
French PMI Data falls.
Euro declines again prior to the ECB meeting and may decline to 2 yr low. This may delay Draghis' Bond issue.
In the meantime......Germany, which benefits greatly from a low Euro because they export so much , has launched their new Volkswagen and they have received orders from Asia for Rolls Royce to keep the Plant busy for 2 years.
Bulgaria has delayed their application to join the Euro for obvious reasons.
Personally, I think Greece will not be able to cope with the austerity, Spain, Italy Portugal and even France will find it hard managing an austerity plan while the Euro is so low and more protests will take place. If Greeek does not leave, maybe Germany will !!!!
The Finnish economy contracts as global, including European, recession bitesand threatens their AAA Bank status.
The Troika returns to Greece to scrutinize the austerity measures meet requirements.
French PMI Data falls.
Euro declines again prior to the ECB meeting and may decline to 2 yr low. This may delay Draghis' Bond issue.
In the meantime......Germany, which benefits greatly from a low Euro because they export so much , has launched their new Volkswagen and they have received orders from Asia for Rolls Royce to keep the Plant busy for 2 years.
Bulgaria has delayed their application to join the Euro for obvious reasons.
Personally, I think Greece will not be able to cope with the austerity, Spain, Italy Portugal and even France will find it hard managing an austerity plan while the Euro is so low and more protests will take place. If Greeek does not leave, maybe Germany will !!!!
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Re: New EC Thread
Panda Wed 5 Sep - 16:38
Eurozone
Draghi, the one true statesman
3 September 2012Le Monde Paris
Peter Schrank
On 6 September, the European Central Bank President is expected to announce that his institution will attempt to resolve the Eurozone crisis by buring Spanish and Italian debt. Notwithstanding German opposition to this decision, Le Monde argues that it has the merit of defining a way forward for Europe.
This week, the President of the ECB should end the debate on bond purchases when he unveils the roadmap of the European Central Bank. In his standoff with the Bundesbank, Mario Draghi has used all his authority to save the single currency. And he has distinguished himself by his fervour.
On the euro front, the autumn rentrée into political activities following the summer holidays has a name, and just one: Mario Draghi. The man will not swerve, we can be sure, from that elegantly crooked smile and courtesy that is his way of showing calm and serenity in heavy weather. Now, more than ever, the future of the single currency is in the hands of the President of the European Central Bank (ECB). It is rather reassuring. This Italian is a true European – and, these days, that species is very rare indeed among the leaders of the EU countries.
Last week in the German weekly Die Zeit M. Draghi declared that he was ready to take "extraordinary measures" to save the euro. Clearly, the ECB will resume a program to buy Treasury bonds to come to the aid of the two major EU countries that are finding it hardest to get financing on the markets, Spain and Italy.
He's right. Madrid and Rome have taken courageous decisions to tackle some of the deep pathologies affecting them, and Italians and Spaniards are paying a high price for these plans for drastic fiscal consolidation and structural reforms. The financial markets, however, taking little notice, are continuing to demand exorbitant interest rates on government bonds from these countries.
The eurozone is being undermined by this, and the penalty thus imposed on two of the largest economies of the 17 is adding to the depressing atmosphere in Europe – this backdrop of high unemployment and anaemic growth. Given the efforts made by the two countries, the spread in the rates on their sovereign debt and that of Germany is irrational and has no serious macroeconomic foundation. In the end, the differential is even the negation of a single currency.
Bundesbank purists still grumbling
Markets have confidence only in the ECB. In betraying his intentions, Mario Draghi has salvaged the summer: rates did ease on Spanish debt, and especially on Italian debt. This Thursday Mr Draghi should clarify his plan for intervention. Perhaps though he will wait one more week, for the decision that is to come down from the German Constitutional Court on September 12 that will decide on whether the financial rescue fund of the 17 states – the European Stability Mechanism – complies with German Basic Law.
Mr Draghi has the support of German Chancellor Angela Merkel and French President François Hollande, who came a little closer over the summer. The purists at the Bundesbank are the only ones grumbling and about the risks of inflation. If they have nothing to offer to keep Spain and Italy from sinking, though, let them keep quiet!
Mr Draghi is imposing a strict conditionality on the interventions by the ECB. The states should carry on with their reforms. Because it will save them, the governments of the 17 states owe it to the Italian to carry out the rehabilitation of the architecture of the euro. It is urgent to complete the fiscal pact and move on to a banking union. It should not be said one day that the sole statesman of the region was the head of the ECB!
On the web
European Union
Dangerously out of sync…
“Do Europeans live in the same space-time in Paris, Brussels and Berlin? Listening in on the corridors of power of each of these three capitals in turn, one is tempted to wonder”, remarks La Tribune.
The economics daily notes that in France “the recently elected left-wing government is slashing away at the ratification of the EU budget”, while “in Brussels no one is talking about the adoption of the Treaty ... but of its implementation and the follow-ups it could have.” In the meantime in Germany, “the month of September is to be marked by the launch of a drive for a Convention to reform, on a large-scale this time, the functioning of the European Union.”
“To sum up,” the Tribune concludes, “Paris sees this return to the bustle of autumn after the summer lull from the standpoint of 2011, Brussels from 2012 – while Berlin has already moved on to 2013. The lack of synchronisation is obviously dangerous.”
Draghi, the one true statesman
3 September 2012Le Monde Paris
Peter Schrank
On 6 September, the European Central Bank President is expected to announce that his institution will attempt to resolve the Eurozone crisis by buring Spanish and Italian debt. Notwithstanding German opposition to this decision, Le Monde argues that it has the merit of defining a way forward for Europe.
This week, the President of the ECB should end the debate on bond purchases when he unveils the roadmap of the European Central Bank. In his standoff with the Bundesbank, Mario Draghi has used all his authority to save the single currency. And he has distinguished himself by his fervour.
On the euro front, the autumn rentrée into political activities following the summer holidays has a name, and just one: Mario Draghi. The man will not swerve, we can be sure, from that elegantly crooked smile and courtesy that is his way of showing calm and serenity in heavy weather. Now, more than ever, the future of the single currency is in the hands of the President of the European Central Bank (ECB). It is rather reassuring. This Italian is a true European – and, these days, that species is very rare indeed among the leaders of the EU countries.
Last week in the German weekly Die Zeit M. Draghi declared that he was ready to take "extraordinary measures" to save the euro. Clearly, the ECB will resume a program to buy Treasury bonds to come to the aid of the two major EU countries that are finding it hardest to get financing on the markets, Spain and Italy.
He's right. Madrid and Rome have taken courageous decisions to tackle some of the deep pathologies affecting them, and Italians and Spaniards are paying a high price for these plans for drastic fiscal consolidation and structural reforms. The financial markets, however, taking little notice, are continuing to demand exorbitant interest rates on government bonds from these countries.
The eurozone is being undermined by this, and the penalty thus imposed on two of the largest economies of the 17 is adding to the depressing atmosphere in Europe – this backdrop of high unemployment and anaemic growth. Given the efforts made by the two countries, the spread in the rates on their sovereign debt and that of Germany is irrational and has no serious macroeconomic foundation. In the end, the differential is even the negation of a single currency.
Bundesbank purists still grumbling
Markets have confidence only in the ECB. In betraying his intentions, Mario Draghi has salvaged the summer: rates did ease on Spanish debt, and especially on Italian debt. This Thursday Mr Draghi should clarify his plan for intervention. Perhaps though he will wait one more week, for the decision that is to come down from the German Constitutional Court on September 12 that will decide on whether the financial rescue fund of the 17 states – the European Stability Mechanism – complies with German Basic Law.
Mr Draghi has the support of German Chancellor Angela Merkel and French President François Hollande, who came a little closer over the summer. The purists at the Bundesbank are the only ones grumbling and about the risks of inflation. If they have nothing to offer to keep Spain and Italy from sinking, though, let them keep quiet!
Mr Draghi is imposing a strict conditionality on the interventions by the ECB. The states should carry on with their reforms. Because it will save them, the governments of the 17 states owe it to the Italian to carry out the rehabilitation of the architecture of the euro. It is urgent to complete the fiscal pact and move on to a banking union. It should not be said one day that the sole statesman of the region was the head of the ECB!
On the web
European Union
Dangerously out of sync…
“Do Europeans live in the same space-time in Paris, Brussels and Berlin? Listening in on the corridors of power of each of these three capitals in turn, one is tempted to wonder”, remarks La Tribune.
The economics daily notes that in France “the recently elected left-wing government is slashing away at the ratification of the EU budget”, while “in Brussels no one is talking about the adoption of the Treaty ... but of its implementation and the follow-ups it could have.” In the meantime in Germany, “the month of September is to be marked by the launch of a drive for a Convention to reform, on a large-scale this time, the functioning of the European Union.”
“To sum up,” the Tribune concludes, “Paris sees this return to the bustle of autumn after the summer lull from the standpoint of 2011, Brussels from 2012 – while Berlin has already moved on to 2013. The lack of synchronisation is obviously dangerous.”
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Re: New EC Thread
Panda Wed 5 Sep - 19:25
The euro rose against most of its 16 major peers after two central bank officials said European Central Bank President Mario Draghi will announce unlimited sterilized bond buying to quell the region’s debt crisis.
The 17-nation currency climbed to a two-month high against the dollar last week amid optimism Draghi would announce additional monetary stimulus at tomorrow’s ECB meeting.Australia’s currency dropped to a seven-week low after the economy expanded less than forecast. Norway’s krone fell after manufacturing contracted for a third month amid dwindling demand from Europe. Canada’s dollar remained lower even after the central bank Governor Mark Carney reiterated that an increase in the central bank’s interest rate may be needed.
Enlarge image
European Central Bank President Mario Draghi
Hannelore Foerster/Bloomberg
Mario Draghi, president of the European Central Bank (ECB).
Mario Draghi, president of the European Central Bank (ECB). Photographer: Hannelore Foerster/Bloomberg
8:20
Sept. 4 (Bloomberg) -- Charles Calomiris, a professor at Columbia Business School, talks about the outlook for the 2012 U.S. presidential election and Federal Reserve and European Central Bank policies. He speaks with Stephanie Ruhle and Erik Schatzker on Bloomberg Television's "Market Makers." (Source: Bloomberg)
“Unlimited and sterilized sounds good because it shows they’re willing to support these sovereigns,” said Eric Viloria, senior currency strategist for Gain Capital Group LLC in New York. “Draghi talked about bond buying at the last meeting, so there has been a lot of optimism priced in and the euro has already moved higher. It could be buy-the-rumor, sell-the-fact.”
The euro rose 0.3 percent to $1.2602 at 12:32 p.m. New York time, after falling as much as 0.5 percent. It reached $1.2638 on Aug. 31, the strongest since July 2. The shared currency gained 0.2 percent to 98.73 yen. Japan’s currency was little changed at 78.35 per dollar.
Chart Patterns
“Technically, the euro is in a really nice downtrend and a convincing break above $1.2650 could reverse this downtrend,”Viloria said.
The euro may decline to a two-year low after it reaches the upper range of its so-called downward channel, Forecast Pte said.
The 17-nation currency climbed to a two-month high against the dollar last week amid optimism Draghi would announce additional monetary stimulus at tomorrow’s ECB meeting.Australia’s currency dropped to a seven-week low after the economy expanded less than forecast. Norway’s krone fell after manufacturing contracted for a third month amid dwindling demand from Europe. Canada’s dollar remained lower even after the central bank Governor Mark Carney reiterated that an increase in the central bank’s interest rate may be needed.
Enlarge image
European Central Bank President Mario Draghi
Hannelore Foerster/Bloomberg
Mario Draghi, president of the European Central Bank (ECB).
Mario Draghi, president of the European Central Bank (ECB). Photographer: Hannelore Foerster/Bloomberg
8:20
Sept. 4 (Bloomberg) -- Charles Calomiris, a professor at Columbia Business School, talks about the outlook for the 2012 U.S. presidential election and Federal Reserve and European Central Bank policies. He speaks with Stephanie Ruhle and Erik Schatzker on Bloomberg Television's "Market Makers." (Source: Bloomberg)
“Unlimited and sterilized sounds good because it shows they’re willing to support these sovereigns,” said Eric Viloria, senior currency strategist for Gain Capital Group LLC in New York. “Draghi talked about bond buying at the last meeting, so there has been a lot of optimism priced in and the euro has already moved higher. It could be buy-the-rumor, sell-the-fact.”
The euro rose 0.3 percent to $1.2602 at 12:32 p.m. New York time, after falling as much as 0.5 percent. It reached $1.2638 on Aug. 31, the strongest since July 2. The shared currency gained 0.2 percent to 98.73 yen. Japan’s currency was little changed at 78.35 per dollar.
Chart Patterns
“Technically, the euro is in a really nice downtrend and a convincing break above $1.2650 could reverse this downtrend,”Viloria said.
The euro may decline to a two-year low after it reaches the upper range of its so-called downward channel, Forecast Pte said.
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Re: New EC Thread
Badboy Thu 6 Sep - 0:07
GREECE EXPECTED TO INTRODUCTED 6-DAY WEEK.
SPAIN IS SPENDING MORE ON BENEFITS AS UNEMPLOYMENT RISES.
SPAIN IS SPENDING MORE ON BENEFITS AS UNEMPLOYMENT RISES.
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Re: New EC Thread
Panda Thu 6 Sep - 6:37
Could Germany save eurozone by leaving it?
By Clyde Prestowitz and John Prout, Special to CNN
May 30, 2012 -- Updated 2350 GMT (0750 HKT)
Clyde Prestowitz and John Prout say that if Germany returned to the deutsche mark, other eurozone nations would benefit
STORY HIGHLIGHTS
Editor's note: Clyde Prestowitz writes on globalization for ForeignPolicy.com and is president of the Economic Strategy Institute. John Prout is the former Paris-based treasurer of Credit Commercial de France.
(CNN) -- With Greece probably heading for an exit from the euro, the European and global economies may be facing disaster. However, there is still time for European leaders to reverse this destructive dynamic with one simple, outside-the-box solution: Instead of pushing Greece out of the eurozone, Germany should voluntarily withdraw and reissue its beloved deutsche mark.
The analysis of the problems of the euro and the European Union has long been upside down, focused on the debt and competitive weaknesses of the so-called peripheral countries (Greece, Italy, Spain, Portugal and Ireland) and especially of Greece. But issues of debt and competitiveness existed and were dealt with rather easily long before the euro arrived, through periodic devaluation of the currencies of the less-competitive countries against those of the more competitive countries, and especially against the deutsche mark.
The problem now is not the weaknesses of the periphery, it's the excessive competitive strength of Germany. Not only is the German economy inherently strong as a result of the high productivity of its workforce, its exports have added competitiveness because the euro is undervalued as far as Germany is concerned. Because it is the common currency of the eurozone countries, the value of the euro reflects the average of their combined competitiveness. But Germany's competitiveness is far above the average. So, for Germany, the euro is too weak. This is why Germany has been accumulating chronic trade surpluses on the scale of the Chinese.
As long as the rest of the eurozone countries are locked in the euro with Germany, the only way for them to become more competitive is to become, well, more Germanic, through austerity measures that cut government spending, reduce welfare budgets, cut wages and raise unemployment. This is, of course, what they have been doing for the past two years.
The aim has been to achieve export-led growth. But because Germany is so hypercompetitive and has been unwilling to stimulate its own economy to achieve higher consumption, its eurozone partners have not been able to increase exports to it and have had thus to compete with it in exporting to the likes of China and the United States.
That hasn't been working very well, and now the consequences of grinding austerity are beginning to tear the political and social fabric even of countries like the Netherlands, which until quite recently were enthusiastically echoing the German call for austerity and growth led by trade with countries outside the EU.
But it is not clear that the eurozone can sustain the social and political pain of austerity long enough and on the scale necessary to eventually achieve competitive parity with Germany.
The alternative is for Germany to revert to the deutsche mark. That would immediately result in appreciation of the German currency and competitive devaluation of the euro for the remaining eurozone countries. Germany would tend to buy more while selling less, and vice versa for the rest of the eurozone. The extra consumption that Germany will not deliver via stimulus policies would be automatically delivered by currency revaluation.
The single most essential element of a euro rescue has always been one form or another of a euro bond guaranteed jointly by all eurozone member countries. What the U.S. Treasury bond is to the U.S. economy, the euro bond would be to the EU. The main obstacle has been Germany's insistence that it would not guarantee payments on bonds for the benefit of other European countries.
German reversion to the deutsche mark would remove this obstacle, and with no further German opposition, the remainder of the eurozone could move ahead to establish a true euro bond, along with a unified treasury function to match the unified banking function of the European Central Bank.
Some may object that German backing would still be required for the eurozone and a euro bond to be viable. That is correct, and Germany would indeed remain committed to the eurozone for a number of reasons. It would need the eurozone more than ever to buy its increasingly expensive exports. The Bundesbank (Germany's central bank) would undoubtedly sell deutsche marks against euros to mitigate appreciation, and the resulting accumulation of euros would be invested in the new euro bonds. This in turn might inspire the European Central Bank to initiate quantitative easing programs that would stimulate the entire EU economy.
The cost to Germany of saving Europe will be a hit to exports and perhaps a temporary rise in unemployment, but a return to the deutsche mark would attract a flood of capital to Germany and thereby spur investment while holding interest rates and inflation down.
The real question is whether the cost of slower export growth and increased unemployment is less than that of paying for Greece, then Spain, etc. Somehow, the "unknown" risks of a German exit from the euro appear more manageable, more quantifiable and in some ways more familiar a challenge than endless austerity, social unrest and political polarization.
if(typeof CNN.expElements==='object'){CNN.expElements.init();}
The opinions expressed in this commentary are solely those of Clyde Prestowitz and John Prout.
By Clyde Prestowitz and John Prout, Special to CNN
May 30, 2012 -- Updated 2350 GMT (0750 HKT)
Clyde Prestowitz and John Prout say that if Germany returned to the deutsche mark, other eurozone nations would benefit
STORY HIGHLIGHTS
- Writers: To salvage eurozone, Germany, not Greece, should withdraw
- They say Germany is very competitive; eurozone countries unable to catch up
- They say Germany could improve its currency valuation, stop preventing euro bonds
- Writers: Euro bonds could help with euro rescue; pain for Germany would be temporary
Editor's note: Clyde Prestowitz writes on globalization for ForeignPolicy.com and is president of the Economic Strategy Institute. John Prout is the former Paris-based treasurer of Credit Commercial de France.
(CNN) -- With Greece probably heading for an exit from the euro, the European and global economies may be facing disaster. However, there is still time for European leaders to reverse this destructive dynamic with one simple, outside-the-box solution: Instead of pushing Greece out of the eurozone, Germany should voluntarily withdraw and reissue its beloved deutsche mark.
The analysis of the problems of the euro and the European Union has long been upside down, focused on the debt and competitive weaknesses of the so-called peripheral countries (Greece, Italy, Spain, Portugal and Ireland) and especially of Greece. But issues of debt and competitiveness existed and were dealt with rather easily long before the euro arrived, through periodic devaluation of the currencies of the less-competitive countries against those of the more competitive countries, and especially against the deutsche mark.
The problem now is not the weaknesses of the periphery, it's the excessive competitive strength of Germany. Not only is the German economy inherently strong as a result of the high productivity of its workforce, its exports have added competitiveness because the euro is undervalued as far as Germany is concerned. Because it is the common currency of the eurozone countries, the value of the euro reflects the average of their combined competitiveness. But Germany's competitiveness is far above the average. So, for Germany, the euro is too weak. This is why Germany has been accumulating chronic trade surpluses on the scale of the Chinese.
As long as the rest of the eurozone countries are locked in the euro with Germany, the only way for them to become more competitive is to become, well, more Germanic, through austerity measures that cut government spending, reduce welfare budgets, cut wages and raise unemployment. This is, of course, what they have been doing for the past two years.
The aim has been to achieve export-led growth. But because Germany is so hypercompetitive and has been unwilling to stimulate its own economy to achieve higher consumption, its eurozone partners have not been able to increase exports to it and have had thus to compete with it in exporting to the likes of China and the United States.
That hasn't been working very well, and now the consequences of grinding austerity are beginning to tear the political and social fabric even of countries like the Netherlands, which until quite recently were enthusiastically echoing the German call for austerity and growth led by trade with countries outside the EU.
But it is not clear that the eurozone can sustain the social and political pain of austerity long enough and on the scale necessary to eventually achieve competitive parity with Germany.
The alternative is for Germany to revert to the deutsche mark. That would immediately result in appreciation of the German currency and competitive devaluation of the euro for the remaining eurozone countries. Germany would tend to buy more while selling less, and vice versa for the rest of the eurozone. The extra consumption that Germany will not deliver via stimulus policies would be automatically delivered by currency revaluation.
The single most essential element of a euro rescue has always been one form or another of a euro bond guaranteed jointly by all eurozone member countries. What the U.S. Treasury bond is to the U.S. economy, the euro bond would be to the EU. The main obstacle has been Germany's insistence that it would not guarantee payments on bonds for the benefit of other European countries.
German reversion to the deutsche mark would remove this obstacle, and with no further German opposition, the remainder of the eurozone could move ahead to establish a true euro bond, along with a unified treasury function to match the unified banking function of the European Central Bank.
Some may object that German backing would still be required for the eurozone and a euro bond to be viable. That is correct, and Germany would indeed remain committed to the eurozone for a number of reasons. It would need the eurozone more than ever to buy its increasingly expensive exports. The Bundesbank (Germany's central bank) would undoubtedly sell deutsche marks against euros to mitigate appreciation, and the resulting accumulation of euros would be invested in the new euro bonds. This in turn might inspire the European Central Bank to initiate quantitative easing programs that would stimulate the entire EU economy.
The cost to Germany of saving Europe will be a hit to exports and perhaps a temporary rise in unemployment, but a return to the deutsche mark would attract a flood of capital to Germany and thereby spur investment while holding interest rates and inflation down.
The real question is whether the cost of slower export growth and increased unemployment is less than that of paying for Greece, then Spain, etc. Somehow, the "unknown" risks of a German exit from the euro appear more manageable, more quantifiable and in some ways more familiar a challenge than endless austerity, social unrest and political polarization.
if(typeof CNN.expElements==='object'){CNN.expElements.init();}
The opinions expressed in this commentary are solely those of Clyde Prestowitz and John Prout.
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Re: New EC Thread
Panda Thu 6 Sep - 7:14
This article makes sense and as I have said often enough, Germany is the only Country which has benefitted from the
weak Euro. The attempt by Draghi to stem the tide of bankrupt Euro Nations is within the remit of the ECB so the Bundesbank cannot object . We don't know whether it will work but at least something is being done rather than the constant austerity mutterings from Merkel which will create more civil unrest in the affected Countries.
There was a rumour that Germany was busy printing Deutchemarks and the German Bonds purchased now with negative yields will prove profitable if redeeemed in Deutchemarks.
weak Euro. The attempt by Draghi to stem the tide of bankrupt Euro Nations is within the remit of the ECB so the Bundesbank cannot object . We don't know whether it will work but at least something is being done rather than the constant austerity mutterings from Merkel which will create more civil unrest in the affected Countries.
There was a rumour that Germany was busy printing Deutchemarks and the German Bonds purchased now with negative yields will prove profitable if redeeemed in Deutchemarks.
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Re: New EC Thread
Panda Thu 6 Sep - 10:16
Stock Markets Up Ahead Of Today's ECB Meeting
Investors see shares climb as markets await the European Central Bank's plans to thwart the growing eurozone debt crisis.
9:16am UK, Thursday 06 September 2012
Markets have climbed in Asia, Europe and the UK
21.8769.146.815.41.681.49
Reuters
Graph: 10-Year Bond Yields Comparison
Enlarge
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Shares across Asia and Europe have climbed ahead of the European Central Bank's anticipated action later today to fight the worsening eurozone debt crisis.
In early trading London's FTSE 100 climbed 0.74%, the Dax was up 1.38% and the Cac was boosted 1.14%.
Spain's Ibex spiked 1.73% and Italy's Mib was boosted by 1.28%.
In Asia, the Nikkei closed 0.75% up while the Hang Seng traded 0.34% near the close.
ECB president Mario Draghi is under pressure over the euro crisis
The ECB's governing council is holding its monthly meeting in Frankfurt and the onus is on president Mario Draghi to back up his promise "to do whatever it takes" to preserve the euro.
Any new ECB action is expected to be announced at a 1.30pm (BST) media conference.
Financial markets have expected Mr Draghi to unveil plans to buy sovereign debt issued by indebted eurozone nations.
Investors have been looking for clues on the likely size and timing of the bond programme, on any specific cap on yields – seen as unlikely – and on whether the ECB will insist on a preferential, more senior status to the bond issue.
"The hope is out there," Gerhard Schwarz, head of equity strategy at Baader Bank, said.
"It seems that... there will be some details provided but so far I think that the ECB will leave its door wide open by refraining to mention specific caps at which it will act.
The ECB board is meeting in Frankfurt
"But still we need a formal aid request from countries like Spain or Italy before the ECB will get busy."
Equities edged higher as investors remained reluctant to sell in case the ECB meeting yields a sufficiently strong stimulus signal to revive risk appetite.
Under Mr Draghi's leadership the ECB has brought the central bank's benchmark borrowing costs down to an all-time low of 0.75%.
But economists are divided as to whether a further rate cut would be announced today.
==============
As far as I can gather the 3 yr Bonds will be a Sovereign Debt , probably because investors lost money on the last Greek
Bonds.
Investors see shares climb as markets await the European Central Bank's plans to thwart the growing eurozone debt crisis.
9:16am UK, Thursday 06 September 2012
Markets have climbed in Asia, Europe and the UK
The dramatic difference in cost of 10-year bonds across
Europe, with mid-morning yield rates (%) on September
6, 2012.
Europe, with mid-morning yield rates (%) on September
6, 2012.
Greece
Portugal
Spain
Italy
UK
Germany
0612182430
21.8769.146.815.41.681.49
FusionCharts
Reuters
Graph: 10-Year Bond Yields Comparison
Enlarge
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Shares across Asia and Europe have climbed ahead of the European Central Bank's anticipated action later today to fight the worsening eurozone debt crisis.
In early trading London's FTSE 100 climbed 0.74%, the Dax was up 1.38% and the Cac was boosted 1.14%.
Spain's Ibex spiked 1.73% and Italy's Mib was boosted by 1.28%.
In Asia, the Nikkei closed 0.75% up while the Hang Seng traded 0.34% near the close.
ECB president Mario Draghi is under pressure over the euro crisis The ECB's governing council is holding its monthly meeting in Frankfurt and the onus is on president Mario Draghi to back up his promise "to do whatever it takes" to preserve the euro.
Any new ECB action is expected to be announced at a 1.30pm (BST) media conference.
Financial markets have expected Mr Draghi to unveil plans to buy sovereign debt issued by indebted eurozone nations.
Investors have been looking for clues on the likely size and timing of the bond programme, on any specific cap on yields – seen as unlikely – and on whether the ECB will insist on a preferential, more senior status to the bond issue.
"The hope is out there," Gerhard Schwarz, head of equity strategy at Baader Bank, said.
"It seems that... there will be some details provided but so far I think that the ECB will leave its door wide open by refraining to mention specific caps at which it will act.
The ECB board is meeting in Frankfurt "But still we need a formal aid request from countries like Spain or Italy before the ECB will get busy."
Equities edged higher as investors remained reluctant to sell in case the ECB meeting yields a sufficiently strong stimulus signal to revive risk appetite.
Under Mr Draghi's leadership the ECB has brought the central bank's benchmark borrowing costs down to an all-time low of 0.75%.
But economists are divided as to whether a further rate cut would be announced today.
==============
As far as I can gather the 3 yr Bonds will be a Sovereign Debt , probably because investors lost money on the last Greek
Bonds.
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Re: New EC Thread
Panda Thu 6 Sep - 10:56
Draghi Credibility at Stake as ECB Tries to Save The Euro
By Gabi Thesing - Sep 6, 2012 10:18 AM GMT+0100
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Europe's Big Day: ECB Prepares to State Crisis Plan
European Central Bank President Mario Draghi’s task today is straight-forward: produce a plan to save the euro.
Enlarge image
Draghi Credibility at Stake as Markets Look to ECB to Save Euro
Mario Vedder/AP Photo
ECB President, Mario Draghi.
ECB President, Mario Draghi. Photographer: Mario Vedder/AP Photo
1:23
Bloomberg's Eric Coleman on the build-up to today's much anticipated speech by Mario Draghi.
Enlarge image
European Central Bank President Mario Draghi
Hannelore Foerster/Bloomberg
Mario Draghi, president of the European Central Bank (ECB).
Mario Draghi, president of the European Central Bank (ECB). Photographer: Hannelore Foerster/Bloomberg
Draghi pledged more than a month ago to do what’s needed to preserve the single currency; now he’s under pressure to follow through with details of a bond-purchase plan to lower borrowing costs in Spain and Italy and prevent a breakup of Europe’s monetary union. Expectations have built to such an extent that Draghi risks losing credibility unless he delivers at a press conference after today’s Governing Council meeting in Frankfurt, economists and investors said.
“Draghi has put his credibility squarely on the line,” said Julian Callow, chief European economist at Barclays Capital in London. “He has made it his business to save the euro, so he is going to be called on that.”
Draghi told the European Parliament this week that the ECB needs to intervene in bond markets to wrest back control of interest rates in a fragmented euro-area economy and save the currency, according to a recording of a closed-door session obtained by Bloomberg News. His blueprint, sent to council members just two days ago and opposed by Germany’s Bundesbank, proposes unlimited buying of government debt with maturities of up to about three years, two central bank officials said yesterday on condition of anonymity.
Rate Cut?
Draghi will hold a press conference at 2:30 p.m., 45 minutes after the ECB announces its interest-rate decision.
Economists are split over whether policy makers will lower the benchmark rate to a new record low, with 30 of 58 in a Bloomberg survey predicting a quarter-point cut to 0.5 percent and 28 forecasting no change.
Separately, the Bank of England will keep its key rate at 0.5 percent and maintain its bond purchase target at 375 billion pounds ($597 billion), another survey shows. That decision is due at noon in London.
The ECB’s 23 council members have a full agenda. As well as discussing rates and the modalities of Draghi’s asset-purchase plan, they will also consider new economic projections and decide whether to loosen rules on the collateral banks can submit in return for central bank loans.
“We think that a loosening of collateral requirements for refinancing operations is likely to be announced, but the ECB does not yet seem ready to move its deposit rate into negative territory,” said Nick Kounis, head of macro research at ABN Amro Bank NV in Amsterdam.
Negative Territory
If the ECB were to cut its benchmark, it would also need to lower its deposit rate if it wanted to maintain the 75 basis- point gap between them. That would mean taking the deposit rate, currently at zero, into negative territory, so that banks would have to pay the ECB to park excess cash with it.
Still, the main focus will be on the bond plan, and Draghi “has set the bar very high for market expectations,” said Andrew Bosomworth, head of Pacific Investment Management Co. in Germany. “To not disappoint, the ECB will have to make its reaction function transparent and at least spell out the maturities it is going to buy.”
Draghi’s plan involves the ECB buying short-dated bonds on the secondary market of countries that ask Europe’s bailout fund to purchase their debt on the primary market, which would require them to sign up to conditions. Neither Spain nor Italy has made such a request yet.
Draghi’s Rationale
Draghi’s rationale for the purchase plan is that ECB interest rates are not being transmitted in most euro-area countries because investors are pricing in the risk of a breakup, something he considers unacceptable. The ECB must regain control of rates in order to fulfill its primary mandate of price stability, he told lawmakers in Brussels on Sept. 3.
The ECB will sterilize its purchases to soothe concerns about printing money, two officials said yesterday. The ECB won’t have seniority on any bonds it buys, and no yield-spread targets or bands will be set publicly, they said.
Draghi will stress the conditionality of the program, with the ECB likely to stop buying the bonds of any government that fails to meet the terms it agrees to when it signs up for aid from Europe’s rescue fund, the people said.
Prime Minister Mariano Rajoy and German Chancellor Angela Merkel meet in Madrid today to discuss the euro crisis and are due to hold a joint news conference at about 2:30 p.m. in Madrid, the same time Draghi speaks.
Tightrope
French President Francois Hollande also meets with U.K. Prime Minister David Cameron in London and Italian Premier Mario Monti hosts European Commission President Jose Manuel Barroso in Florence.
Draghi is walking a tightrope, said Ken Wattret, chief euro-area economist at BNP Paribas in London.
Because Italian and Spanish bond yields have dropped in anticipation of ECB action, there’s a risk that the two countries won’t see the need to ask for help, Wattret said. On the other hand, disappointment with Draghi’s plan today may trigger a market selloff that “could be the circuit breaker that forces Spain at least to ask for aid,” he said.
Spain’s two-year yields dropped to as low as 3.04 percent yesterday from a euro-era high of 7.15 percent on July 25. Italy’s two-year yields have dropped almost three percentage points over the same period.
Spain plans to sell as much as 3.5 billion euros ($4.4 billion) of short-dated bonds at an auction at about 10:40 a.m. in Madrid today.
German Opposition
The ECB has been at the forefront of fighting the debt crisis, which has so far pushed five countries into bailouts and driven the 17-nation euro economy to the brink of recession.
In addition to governments dragging their heels, Draghi’s bond-purchase plan faces opposition from German policy makers, politicians and executives.
“An unlimited and far-reaching intervention by the central bank by buying sovereign debt is beyond the mandate of the ECB,” Commerbank AG Chief Executive Officer Martin Blessing said at a banking conference in Frankfurt yesterday. “I cannot image how one can build trust and a strong currency union by violating the law. There is the danger that we keep on buying time while the pressure to reform is declining.”
Germany’s Constitutional Court could also throw a spanner in the works when it rules on the legality of Europe’s permanent bailout fund, the European Stability Mechanism, on Sept. 12.
“The ECB is taking a leap of faith that governments will pursue and implement the reform agenda,” Bosomworth said. Still, unlike in the past, “there is more of an awareness among governments about how important this is,” he said.
Draghi’s bond-purchase plan won’t solve Europe’s debt crisis, said Erik Nielsen, global chief economist at UniCredit Bank AG in London. “But he’s fed up with markets pricing in euro-area breakups, and I wouldn’t mess with him if I were a trader.”
By Gabi Thesing - Sep 6, 2012 10:18 AM GMT+0100
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Europe's Big Day: ECB Prepares to State Crisis Plan
European Central Bank President Mario Draghi’s task today is straight-forward: produce a plan to save the euro.
Enlarge image
Draghi Credibility at Stake as Markets Look to ECB to Save Euro
Mario Vedder/AP Photo
ECB President, Mario Draghi.
ECB President, Mario Draghi. Photographer: Mario Vedder/AP Photo
1:23
Bloomberg's Eric Coleman on the build-up to today's much anticipated speech by Mario Draghi.
Enlarge image
European Central Bank President Mario Draghi
Hannelore Foerster/Bloomberg
Mario Draghi, president of the European Central Bank (ECB).
Mario Draghi, president of the European Central Bank (ECB). Photographer: Hannelore Foerster/Bloomberg
Draghi pledged more than a month ago to do what’s needed to preserve the single currency; now he’s under pressure to follow through with details of a bond-purchase plan to lower borrowing costs in Spain and Italy and prevent a breakup of Europe’s monetary union. Expectations have built to such an extent that Draghi risks losing credibility unless he delivers at a press conference after today’s Governing Council meeting in Frankfurt, economists and investors said.
“Draghi has put his credibility squarely on the line,” said Julian Callow, chief European economist at Barclays Capital in London. “He has made it his business to save the euro, so he is going to be called on that.”
Draghi told the European Parliament this week that the ECB needs to intervene in bond markets to wrest back control of interest rates in a fragmented euro-area economy and save the currency, according to a recording of a closed-door session obtained by Bloomberg News. His blueprint, sent to council members just two days ago and opposed by Germany’s Bundesbank, proposes unlimited buying of government debt with maturities of up to about three years, two central bank officials said yesterday on condition of anonymity.
Rate Cut?
Draghi will hold a press conference at 2:30 p.m., 45 minutes after the ECB announces its interest-rate decision.
Economists are split over whether policy makers will lower the benchmark rate to a new record low, with 30 of 58 in a Bloomberg survey predicting a quarter-point cut to 0.5 percent and 28 forecasting no change.
Separately, the Bank of England will keep its key rate at 0.5 percent and maintain its bond purchase target at 375 billion pounds ($597 billion), another survey shows. That decision is due at noon in London.
The ECB’s 23 council members have a full agenda. As well as discussing rates and the modalities of Draghi’s asset-purchase plan, they will also consider new economic projections and decide whether to loosen rules on the collateral banks can submit in return for central bank loans.
“We think that a loosening of collateral requirements for refinancing operations is likely to be announced, but the ECB does not yet seem ready to move its deposit rate into negative territory,” said Nick Kounis, head of macro research at ABN Amro Bank NV in Amsterdam.
Negative Territory
If the ECB were to cut its benchmark, it would also need to lower its deposit rate if it wanted to maintain the 75 basis- point gap between them. That would mean taking the deposit rate, currently at zero, into negative territory, so that banks would have to pay the ECB to park excess cash with it.
Still, the main focus will be on the bond plan, and Draghi “has set the bar very high for market expectations,” said Andrew Bosomworth, head of Pacific Investment Management Co. in Germany. “To not disappoint, the ECB will have to make its reaction function transparent and at least spell out the maturities it is going to buy.”
Draghi’s plan involves the ECB buying short-dated bonds on the secondary market of countries that ask Europe’s bailout fund to purchase their debt on the primary market, which would require them to sign up to conditions. Neither Spain nor Italy has made such a request yet.
Draghi’s Rationale
Draghi’s rationale for the purchase plan is that ECB interest rates are not being transmitted in most euro-area countries because investors are pricing in the risk of a breakup, something he considers unacceptable. The ECB must regain control of rates in order to fulfill its primary mandate of price stability, he told lawmakers in Brussels on Sept. 3.
The ECB will sterilize its purchases to soothe concerns about printing money, two officials said yesterday. The ECB won’t have seniority on any bonds it buys, and no yield-spread targets or bands will be set publicly, they said.
Draghi will stress the conditionality of the program, with the ECB likely to stop buying the bonds of any government that fails to meet the terms it agrees to when it signs up for aid from Europe’s rescue fund, the people said.
Prime Minister Mariano Rajoy and German Chancellor Angela Merkel meet in Madrid today to discuss the euro crisis and are due to hold a joint news conference at about 2:30 p.m. in Madrid, the same time Draghi speaks.
Tightrope
French President Francois Hollande also meets with U.K. Prime Minister David Cameron in London and Italian Premier Mario Monti hosts European Commission President Jose Manuel Barroso in Florence.
Draghi is walking a tightrope, said Ken Wattret, chief euro-area economist at BNP Paribas in London.
Because Italian and Spanish bond yields have dropped in anticipation of ECB action, there’s a risk that the two countries won’t see the need to ask for help, Wattret said. On the other hand, disappointment with Draghi’s plan today may trigger a market selloff that “could be the circuit breaker that forces Spain at least to ask for aid,” he said.
Spain’s two-year yields dropped to as low as 3.04 percent yesterday from a euro-era high of 7.15 percent on July 25. Italy’s two-year yields have dropped almost three percentage points over the same period.
Spain plans to sell as much as 3.5 billion euros ($4.4 billion) of short-dated bonds at an auction at about 10:40 a.m. in Madrid today.
German Opposition
The ECB has been at the forefront of fighting the debt crisis, which has so far pushed five countries into bailouts and driven the 17-nation euro economy to the brink of recession.
In addition to governments dragging their heels, Draghi’s bond-purchase plan faces opposition from German policy makers, politicians and executives.
“An unlimited and far-reaching intervention by the central bank by buying sovereign debt is beyond the mandate of the ECB,” Commerbank AG Chief Executive Officer Martin Blessing said at a banking conference in Frankfurt yesterday. “I cannot image how one can build trust and a strong currency union by violating the law. There is the danger that we keep on buying time while the pressure to reform is declining.”
Germany’s Constitutional Court could also throw a spanner in the works when it rules on the legality of Europe’s permanent bailout fund, the European Stability Mechanism, on Sept. 12.
“The ECB is taking a leap of faith that governments will pursue and implement the reform agenda,” Bosomworth said. Still, unlike in the past, “there is more of an awareness among governments about how important this is,” he said.
Draghi’s bond-purchase plan won’t solve Europe’s debt crisis, said Erik Nielsen, global chief economist at UniCredit Bank AG in London. “But he’s fed up with markets pricing in euro-area breakups, and I wouldn’t mess with him if I were a trader.”
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Re: New EC Thread
Panda Thu 6 Sep - 14:10
Draghi is speaking at the moment, reporting his vision for the future of the Euro . Unless you are an Economic wizard I
doubt you will understand much of it., but hopefully the reporters will simplify his proposals.
Basically, he says the ECB does have the right to act, but one member of the EU asks him what right he has to use the ECB in this manner when it is not in the Treaty.
His forecast is 2012 is minus .2% and the ecomony remains weak for 2013 and will recover very gradually.Inflation forecast for 2013 is forecast to rise from 1.6% to 1.9%
The ECB has a responsibility to help ALL Nations strictly within the Mandate.....dig at Germany there.!!!.
IMF involvement will be sought ECB c
an't dictate.
These Bonds will only be issued to countries who abide by the austerity measures .
=====================
That's about all I understood , but just wondering about the millions various Euro Countries borrowed at 1% interest
for three years last year .....how is that to be repaid.????
One American has just said this is the 3rd attempt to resolve the Euro crisis, why does Draghi think this one will work????
doubt you will understand much of it., but hopefully the reporters will simplify his proposals.
Basically, he says the ECB does have the right to act, but one member of the EU asks him what right he has to use the ECB in this manner when it is not in the Treaty.
His forecast is 2012 is minus .2% and the ecomony remains weak for 2013 and will recover very gradually.Inflation forecast for 2013 is forecast to rise from 1.6% to 1.9%
The ECB has a responsibility to help ALL Nations strictly within the Mandate.....dig at Germany there.!!!.
IMF involvement will be sought ECB c
an't dictate.
These Bonds will only be issued to countries who abide by the austerity measures .
=====================
That's about all I understood , but just wondering about the millions various Euro Countries borrowed at 1% interest
for three years last year .....how is that to be repaid.????
One American has just said this is the 3rd attempt to resolve the Euro crisis, why does Draghi think this one will work????
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Re: New EC Thread
Panda Thu 6 Sep - 17:18
Justice and the rule of law are a luxury that Greece can no longer afford.
Louis Boucan on Fight neo-nazis with ideas
Heinrich IX on Draghi, the one true statesman
==============================================
A couple of comments from Articles I have posted. A poll suggests Draghi's plan will not work.
Louis Boucan on Fight neo-nazis with ideas
steinberg on André Glucksmann: Europe let down by its intellectuals
And Europe will wash up on the beaches of Crete, as in mythology.
The minute Draghi starts to buy Italian bonds the motivation for reforms there will drop to zero. Take away the pressure of the markets and bunga bunga is back with a vengeance.
Heinrich IX on Draghi, the one true statesman
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A couple of comments from Articles I have posted. A poll suggests Draghi's plan will not work.
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