Re: New EC Thread

[Badboy]

I THINK I HEARD ON THE NEWS THAT CYPRUS HAS APPEALED FOR AN EU BAILOUT LOAN.
ALSO PROGRAMME ON BBC1 AT 8.30 ABOUT EUROZONE CRISIS

[Panda]

I THINK I HEARD ON THE NEWS THAT CYPRUS HAS APPEALED FOR AN EU BAILOUT LOAN.

ALSO PROGRAMME ON BBC1 AT 8.30 ABOUT EUROZONE CRISIS

.I THINK I HEARD ON THE NEWS THAT CYPRUS HAS APPEALED FOR AN EU BAILOUT LOAN".....I just posted that Badboy

I just checked, the Programme is Panorama, John Humphrys discussing the effect of the austerity measures. Should be interesting.

Now we have Ireland, Greece, Belgium Spain, Cyprus, probably Italy and maybe France seeking help.....that is half the Euro Countries!!!!! where will it
all end???

[Badboy]

I THINK I HEARD ON THE NEWS THAT CYPRUS HAS APPEALED FOR AN EU BAILOUT LOAN.

ALSO PROGRAMME ON BBC1 AT 8.30 ABOUT EUROZONE CRISIS

.I THINK I HEARD ON THE NEWS THAT CYPRUS HAS APPEALED FOR AN EU BAILOUT LOAN".....I just posted that Badboy

I just checked, the Programme is Panorama, John Humphrys discussing the effect of the austerity measures. Should be interesting.

Now we have Ireland, Greece, Belgium Spain, Cyprus, probably Italy and maybe France seeking help.....that is half the Euro Countries!!!!! where will it
all end???

IS FRANCE SEEKING HELP NOW,OH MY GIZZLY AUNT,BELGIUM AS WELL MY VERY GIZZLY AUNT!
HOW LONG BEFORE WHOLE THING GOES WHAM BANG THANK YOU MA'AM?

[Panda]

I THINK I HEARD ON THE NEWS THAT CYPRUS HAS APPEALED FOR AN EU BAILOUT LOAN.

ALSO PROGRAMME ON BBC1 AT 8.30 ABOUT EUROZONE CRISIS

.I THINK I HEARD ON THE NEWS THAT CYPRUS HAS APPEALED FOR AN EU BAILOUT LOAN".....I just posted that Badboy

I just checked, the Programme is Panorama, John Humphrys discussing the effect of the austerity measures. Should be interesting.

Now we have Ireland, Greece, Belgium Spain, Cyprus, probably Italy and maybe France seeking help.....that is half the Euro Countries!!!!! where will it
all end???

IS FRANCE SEEKING HELP NOW,OH MY GIZZLY AUNT,BELGIUM AS WELL MY VERY GIZZLY AUNT!
HOW LONG BEFORE WHOLE THING GOES WHAM BANG THANK YOU MA'AM?

No France hasn't officially asked for help, neither has Italy, but Italy is very vulnerable , has a huge debt problem and the economy around the World
has slowed down. One of the problems is bank interlending, British Banks are owed £10 billion.

[Badboy]

ITS THE BRICS COUNTRY THAT ARE THINKING OF LENDING TO EU FUND BECAUSE THEY NEED TO EXPORT TO EU COUNTRIES.

[Badboy]

PROGRAMME JUST STARTED.
SHOWED A STREET WHERE HALF THE SHOPS ARE EMPTY.
SAYS WEALTHY ARE STILL HOLDING ONTO THEIR WEALTH,
A ORCHESTORER HAS HAD WAGES SLASHED TO HALF,WIFE A LAWYER DOESN'T KNOW IF CLIENTS WILL PAY
PERSON SAYS GREEKS NEED JOBS AND TO PAY TAXES
70% USED TO WORK IN AGRI,BUT NOW 3%
A PERSON USED TO FISH FOR PLEASURE,BUT NOW FROM NEED
PENSION CUT 30%
ESTIMATED 40% IN POVERTY
JOINING EU,CHEAP LOANS AVAIBLE,NOW DEEP DEBT
VOLUNTARY ORG SPRING UP EVERYWHERE.
MIDDLE CLASS FAMILIES SLIPPING INTO POVERTY
SOME PEOPLE WOULD STARVE WITHOUT CHARITY.
SOME CHILDREN SENT TO SCHOOL WITHOUT EATING FIRST.
PHARMACIES WITH NO DRUGS.
EVEN A PHARMIST WITH A HEART CONDITIONS CAN'T GET HER MEDICATION.
ONE PERSON SAID POLITICANS ARE TO BLAME,DOESN'T THINK THE POLITICANS WHO CAUSED PROBLEMS CAN SOLVE IT.
LITTLE OLD LADIES HAVE TO BE ESCORTED TO ATMS
GOLDEN DAWN BOASTS THAT IT HAS RESCORTED LAW AND ORDER IN SOME PLACES.
MEMBER DOESN'T KNOW IF CRIMES AGAINST JEWS TOOK PLACE UNDER HITLER.
POLICE WON'T GO INTO CERTAIN PLACES.
FIFTH OF PUBLIC SECTOR WORKERS TO LOSE JOBS.
NATIONAL HERO SAYS BANKS FINANCIAL INSTITUTIONS DON'T PAY THEIR TAXES.

[Panda]

Debt crisis

EU irked by Cypriot talks with Moscow


25 June 2012

Le MONDE COMMENTS




Will Cyprus be the next state to receive aid from the European Financial Stability Facility (EFSF)? The answer to this question will in part be determined by a new development which has emerged much to the annoyance of the European Union, remarks Le Monde: Nicosia “is conducting parallel negotiations in a bid to find an alternative source of funding” –


In the wake of an EU offer to bankroll the island to the tune of 10 billion euros – more than half of the Cypriot GDP – and at a time when the country is preparing to take over the rotating presidency of the EU on 1st July, the Cypriot bid to avoid a European bailout is perceived as an annoyance.

The French daily explains that “it is this second option involving support from a third country, in this case Russia, which is favoured by the government.” The Europeans are critical of the double game being played by Nicosia which views the EFSF as a less advantageous choice, even though the reasons the Cypriot position are well understood –


Cyprus is worried about the possibility of a visit from troika experts that could accompany EU aid. [...] Even more daunting than the possibility of pressure to raise the island’s 10% corporate tax rate, which is the lowest in Europe, Cyprus is alarmed by the prospect of austerity.

Le Monde reminds its readers that Russia is particularly attentive to the economic well-being of the Mediterranean island –


Moscow has a special interest in ensuring that the financial climate on the island remains calm: the Russian funds based in Cyprus, which take advantage of the bilateral tax agreement between the two countries, have made Cyrus the world’s biggest investor in Russia.

[Panda]

American Economics Editor was in Europe last week, says nothing will be acheived at the EU Meeting on Thursday

Cyprus has requested a $7.5 billion bail-out, not sure if the money is coming from the IMF, Russia or EFSF. Moodys has downgraded all Cypriot Banks
to junk bond status. The problem for Cyprus is a lot of their cash is tied up in lending to Greece

European stocks decline as it is thought the EURO will decline to E1.15 by yhe end of the year, this will suit Germany but be hard on the rest of Europe.

Spanish Bond Auction did not realise full sale and the yield was higher, moving closer to the dreaded 7% Moody's has downgraded 28 Spanish Bank
ratings including Santander .

[Badboy]

EU BAILOUTS HAVE COST 500 BILLION SO FAR.

[Panda]

EU BAILOUTS HAVE COST 500 BILLION SO FAR.

Apparently Monti is trying to find a way for Italy to borrow from the RFES Fund without having to abide by the austerity plan, Portugal tried, as did
Spain, now Cyprus but Merkel is adamant.

[Panda]

25 June 2012

Presseurop
Der Spiegel, Frankfurter Allgemeine Zeitung Comment


"Anyone who listened to the constitutional court ruling will know that there is no other solution.” The remark made by the social-democratic former finance minister, Peer Steinrück, highlights an opinion that is increasingly prevalent among Germany’s politicians: a change to the Basic Law for the Federal Republic, ratified by referendum, may well be necessary for the further development of Berlin’s European plans.

In an interview with Der Spiegel, the country’s current Finance Minister Wolfgang Schäuble advocated the appointment of a European finance minister with the power to veto national budgets, and the creation of a union of major banks under the control of a single European regulator.

The transfer of sovereignty implied by these measures will necessitate the reform of the German constitution. However, Schäuble believes that a referendum, which can only be launched if it has the support of two thirds of the Berlin parliament, could be organised “faster than expected“.

For Frankfurter Allgemeine Zeitung, Schäuble has “a rose-tinted view” of the situation. The daily criticises the minister for “pretending that he can impose the same standard of living across Europe. Why has his ministry never calculated the cost to the German taxpayer of a morally bankrupt bailout?”

[Panda]

Germany Pressed to Scrap Senior Status on Spain Rescue Loans

By James G. Neuger - Jun 26, 2012 10:53 AM GMT+0100
.


..
Germany faces pressure to surrender preferred status on rescue loans to Spain’s banks in a standoff that echoes Chancellor Angela Merkel’s rejection of debt sharing to fight Europe’s deepening financial crisis.

Along with Finland and the Netherlands, Germany wants official loans of as much as 100 billion euros ($125 billion) to Spain to be repaid first in the event of a default, putting bondholders at a disadvantage, said two European officials.




















Angela Merkel, Germany's chancellor. Photographer: Michele Tantussi/Bloomberg
.
Finance ministers from the three AAA rated countries stood their ground last week, said the officials who asked not to be named because the talks were private. The decision next goes to Merkel and fellow government leaders who have been forced to renounce previous attempts to put taxpayers ahead of investors in structuring bailouts.

“This is one of the focal points for market anxiety about the Spanish bailout,” said Nicholas Spiro, head of Spiro Sovereign Strategy in London. The move to assert seniority “undermines the credibility of the bailout. This is partly what is fueling ‘bailout creep’ in Spain -- the fact that the price Spain is paying for this new bailout, due to its flawed structure at present, is a price that is too high.”

The threat of a subordinated status was one reason why Spanish bonds tumbled after the bailout offer was made on June 9. Ten-year Spanish yields have risen 49 basis points to 6.71 percent since then. They rose as high as 7.29 percent last week.

Spanish Bid

Spain made a formal bid for the aid yesterday, ushering in talks over details -- the size, potential breakup of individual banks, and the remaking of Spain’s supervisory system -- that will culminate when finance ministers next meet on July 9.

One issue has gone above the ministers pay’ grade: the question of which creditors are first in line in the event of a default. It is on the agenda for the June 28-29 European Union summit, which will also try to lay out the building blocks of a post-crisis economy.

“All eyes will be on Germany,” Merkel said in Berlin yesterday.

European proposals today to reshape the crisis-struck euro area ran into immediate criticism from Germany for putting too much emphasis on debt sharing and too little on controlling national budgets.

Seniority Reversals

In their on-the-job training in crisis management, European leaders have had to twice reverse investor-unfriendly moves, conceding they were self-inflicting mistakes that roiled markets. The first was the Merkel-led push starting in October 2010 to make bond writedowns part of the toolkit of the permanent bailout fund.

That drive pushed up Ireland’s borrowing costs, forcing it to fall back on official credits a month later. It culminated with a second Greek aid package that foresaw bondholder losses of 50 percent, and a political declaration that the treatment of Greece was a one-off.

The second flip-flop involved lending by the permanent fund, the European Stability Mechanism, originally intended to enjoy seniority over other creditors. Finance ministers last year ditched that status on any loans to Greece, Ireland and Portugal, the three countries then drawing on official aid.

“Very good news,” said Irish Finance Minister Michael Noonan at the time. By ceding the first claim on getting repaid, creditor governments made it easier eventually to lure private investors to buy Irish bonds, the reasoning went.

Fund Flexibility

Euro leaders went on to rewrite the statutes of the permanent fund, in an effort to make future bailouts more appealing to investors. New language recalled that European leaders had voiced a preference for senior status on loans to debtor governments, while giving them room to wriggle out of it.

The handling of Spain -- the euro area’s fourth-largest economy, bigger than Greece, Ireland and Portugal combined -- will test that flexibility. Finance chiefs last week eyed the permanent fund as the main vehicle for Spanish aid, agreeing to start with the temporary fund only if the ESM isn’t ready.

Official creditors could defuse the issue by granting loans over longer maturities than Spanish bonds, Spanish Deputy Economy Minister Fernando Jimenez Latorre said.

“The longer the maturity and the grace period, and the lower the interest rate, the lower the risk of it being considered senior,” Jimenez Latorre said in Santander, Spain, yesterday. The issue will be resolved “satisfactorily,” he said.

Temporary Fund

From the bondholders’ perspective, the 440 billion-euro temporary fund known as the European Financial Stability Facility is a better deal. Its lending doesn’t outrank private investors on the scale of creditors.

For governments, the EFSF is unwieldy. It operates on a system of guarantees that add to each country’s debt. The permanent 500 billion-euro ESM, due to be declared operational on July 9, is structured more as an investment fund, with capital contributions not counting toward the national debt.

Since Spain still has to conduct a “bottom-up” test of its banks and give them time to seek financing from the market, the first disbursement of aid probably won’t be needed until the end of the year, an official involved in the talks said.

By then, the ESM will be up and running, making the senior status an option. Dropping it would produce complications with Finland, which in the absence of the priority repayment guarantee would want Spain to offer collateral instead, an official said. Finland also extracted collateral as part of the second Greek bailout

[Badboy]

PROGRAMME AT 21.00(NO 7,I THINK ON MY FREEVIEW) IS ABOUT GREECE,BUST AND HOW THE YOUNG ARE COPING,METHINKS

[Panda]

26 June 2012 Last updated at 18:50 Share this pageEmail Print Share this page


European authorities have unveiled their vision for the future, which gives them much greater powers.

It includes the creation of a European treasury, which would have powers over national budgets.

European Commission President Jose Manuel Barroso said it was "a defining moment for European integration".

The 10-year plan is designed to strengthen the eurozone and prevent future crises, but critics say it will not address current debt problems.

This week, some markets fell sharply on fears that leaders at the EU summit on Thursday and Friday would fail to agree immediate measures to try to stem the current crisis, which has now engulfed five eurozone members.

Spain is negotiating the terms of loans worth up to 100bn euros for its banks, and the new Greek government wants to ease the terms of its huge bailout.

The governor of the Bank of England, Sir Mervyn King, expressed concern about the recent response of European authorities.

"I am pessimistic. I am particularly concerned because over two years now we have seen the situation in the euro area get worse and the problem being pushed down the road," he said, while appearing at a parliamentary hearing.

The latest document, titled Towards a Genuine Economic and Monetary Union, was released by European Council President Herman Van Rompuy and was drawn up with the presidents of the European Commission, the Eurogroup and the European Central Bank.

Eurogroup president Mr Van Rompuy said it was "not meant to be a final blueprint", but that he expected "to reach a common understanding amongst us on the way forward" at the EU summit.

Continue reading the main story “
Start Quote
It has generally been true that the European project has been driven forward when France and Germany are in step. They are not at the moment. There is a deep philosophical and political divide between them ”
End Quote
Gavin Hewitt

Europe editor

--------------------------------------------------------------------------------
Read more from Gavin

'Responsibility'

European Commission President Jose Manuel Barroso said the guiding principle was that "greater solidarity and greater responsibility must go hand in hand".

Proposals in the report included:

Limits on the amount of debt individual countries can take on
Annual national budgets can be vetoed if they are likely to mean a country exceeding its debt limits
The eurozone borrowing money collectively "could be explored"
A European treasury office to be set up to control a central budget and keep an eye on national ones
A single European banking regulator and a common scheme guaranteeing bank deposits
Common policies on employment regulations and levels of taxation
Joint decision-making with national parliaments to give it "democratic legitimacy"
One of the big changes under the new proposals is that while in the past eurozone members had to keep their budget deficits below a certain level, a European treasury would be able to force them to make changes to their budgets to keep their deficits down.

Earlier, German Finance Minister Wolfgang Schaeuble also called for there to be a European finance minister, with the power to veto national budgets as well as an elected president of Europe.

The document said greater fiscal union could lead to common debt being issued by eurozone countries.

Eurobonds, as they are known, would help weaker countries such as Spain borrow more cheaply, but they have so far been resisted in Germany, as they require stronger countries to take on the risk.
Chancellor Angela Merkel, who this week described eurobonds as "counterproductive", may have gone further on Tuesday. According to one account given to a news agency, she told a political meeting that that would be no shared debt "as long as I live".

French Finance Minister Pierre Moscovici has said leaders at this week's summit should, "lay the groundwork for the second phase of the euro".

As BBC Europe editor Gavin Hewitt points out, the area's two biggest economies "are on different pages" about how to fix the crisis.

"It has generally been true that the European project has been driven forward when France and Germany are in step.

"They are not at the moment. There is a deep philosophical and political divide between them," our correspondent says.

Others were also sceptical about what might be achieved at the summit.

"The EU summit will likely produce re-hashed plans for closer fiscal integration and a banking union but without any substantive detail of how it will actually be put into practice," said analyst Neil MacKinnon of VTB Capital.

[Panda]

Merkel says "as long as I live" I will not agree to Eurobonds until all Euro Countries are in the same position financially. This has scuppered any chance
of adopting the Barossa plan.

Rajoy will endose fiscal and banking Union but says Spain will not be able to repay the current bond yields.

The EU has reduced the Microsoft antitrust fine by E39 million to E860 million .

[Panda]

Categories





















If The Eurozone Breaks Up Guess Who’ll Be The Biggest Losers? The Eurocrats in Brussels

in Point Of View / on June 26, 2012 at 12:05 am /

Martin McCauley writes from London: I will start from afar and gently reach a crescendo, making a point outlined in the heading.

Yes, Tony Blair is at it again, plugging the advantages of Britain joining the euro. The urge to become a big shot in the EU is the main reason for it. Tony wants to be the President of Europe, with all the lovely perks and immunity from prosecution thrown in.

Back in the bad old days of Labour in power Gordon Brown stopped Blair from taking the country into the single currency. But now that Tony is a loose cannon of sorts he is proposing that this country seriously considers ditching the pound and joining the happy family that is currently sinking along with his beloved euro.

I am being serious, in case you’re wondering. Mr Blair actually believes that Britain would be better off being run by José Manual Barroso, the President of the EU Commission, and Herman van Rompuy, the President of the EU Council, along with the rest of the unelected gang. To be fair, he did say we should join the single currency when it suits us best. But even considering the move smacks of some pretty weird thinking.

Where does Blair stand on the burning question of the moment: should Germany save the euro? Germany should ‘commit its economy to the single currency’, he says. This would involve ‘treating the debts of one as the debts of all’. Yes, Blair actually thinks Berlin should pay off the debts of Greece, Italy, Spain, France and other members of the Eurozone. This reveals he’s got no idea how things work in real life. There is no way Germany could engage in such a transfer of wealth. It simply does not have the money to do so. Any German government that would suggested this waste of hundreds of billions of euros, in a vain attempt to save the euro, would be thrown out of office.

Take Italy, for example. Mario Monti, the technocrat parachuted in by Berlin to sort out the mess left by Silvio Berlusconi, is losing patience. He has been able to reduce the budget deficit. However, he has failed to reform the anti-competitive labour laws and to liberalise the economy. This means that Italy is standing still or rather going backwards. Its national debt is over 120 per cent of its Gross Domestic Product. Servicing this would become a massive problem if interest rates rose sharply. Elections are due next spring or probably before as people tire of Monti and his austerity mantra.

A rising political star at the moment is the comedian Beppe Grillo. He is against austerity and favours leaving the euro and returning to the lira. Opinion polls suggest that 20 per cent of voters agree. Who would win an election? Silvio Berlusconi is in poll position to do so. So politics returns full circle.

Germany will agree to another bailout of Spanish banks, especially as Madrid has now asked the EU for a bank bail-out officially. All that does is to postpone the day of reckoning for Spain’s uncompetitive economy though.

Then consider Greece. The tired coalition which ran Greece into the ground is back in office. For how long? Syriza is pleased it lost the last election. It feels it will win the next one handsomely.

Berlin is faced with a momentous decision. Would Germany be better off inside or outside the Eurozone? How much would it cost Germany to save the euro? What would be the bill if Germany left the euro?

It is beginning to dawn on some in Berlin that the euro is a vanity project dreampt up by the Eurocrats in Brussels. Take away the single currency, and they lose power. They argue that the euro is vital for European growth. Without it the EU would collapse, they insist.

This is absolute nonsense. Greece, Italy and Spain would be better off with their own currencies. At present they have to go cap in hand to Brussels for bailouts and accept austerity packages that are impossible to implement.

There is no economic logic to the euro project. It is merely there to increase the power of the EU Commission. The sooner the Eurozone is broken up, the sooner Europe will start growing again. We have seen an Arab Spring. It is time for a Brussels Spring, to sweep away those who are driving Europe in the wrong direction. Forward with the revolution!

–End–

[Panda]

Arend van Dam


By offering greater control over national budgets and banks, the heads of EU institutions are taking up the federalist challenge launched by Germany. But this solution risks provoking resistance from some member states – without weakening the attacks from the markets.

Claudi Pérez


All throughout the European crisis – and suddenly it has been with us for years – Germany has displayed small-minded leadership plagued by political calculations, by ideological dogmatism, and by negativity on both right and left.

The recession has been long entrenched in the South, partly due to efforts to digest the last years of the uncontrolled boom, partly due to these bailouts based on second-class solidarity, and partly due to the policies of severe cuts (dangerously severe), which Berlin has been pushing with the broomstick of sweeping austerity.

The magic of austerity was meant to restore confidence in the eurozone but it has thrown the euro into an existential crisis. Still, times are changing.

Chancellor Angela Merkel, Finance minister Wolfgang Schäuble and the German central bank president, Jens Weidmann, have recently cooked up a new version of an old proposal.

Reviving the euro project

Never in the past 20 years has Berlin spoken so loudly and clearly of political union. Yesterday Brussels picked up the gauntlet with an ambitious document that seeks to rebuild the European project.

It launched a proposal that, in view of the paralysis that has dangerously weakened the euro, tests the limits of the EU. In return, if clear steps towards that political union are given, it removes obstacles for Germany to begin to open its hand in some matters.

This path, though – nothing unusual when it comes to Europe – is strewn with unknowns.

Two unknowns stand out. One is the role that a France led by President François Hollande wishes to play – Paris isn’t going to play second violin to Germany. It also must fight the intergovernmental drift towards the federal model, which normally causes the French to break out in a rash.

The second unknown is how the great euro-crisis can be managed over the short term to avoid a catastrophic implosion.

Unanswered questions

In the proposal drawn up by the four presidents – the president of the Council, Herman Van Rompuy, of the Commission, José Manuel Barroso, of the ECB, Mario Draghi, and of the Eurogroup, Jean-Claude Juncker – both questions remain totally unanswered, and will begin to be resolved in Brussels starting on June 28 at another summit of heads of state and governments. The only expectation of the summit is that it will live up to past failures.

Whether the proposal moves forward or whether it remains a mere rhetorical exercise, without any precise timetable, will be decided by the leaders. At the same time, they must find a quick exit for countries that are already up to their necks in water.

With a vision inspired by the wishes of Germany, version 2.0 of the EU is to get a tighter grip on each country. According to the document, which sets this coming December as a key date, Brussels would not only set a ceiling of expenditure and public debt; if a member state wishes to issue debt securities above that ceiling, it should “be justified and receive” prior approval from the European institutions.

This decision would in fact imply a handover of the key to the strongbox to something resembling a “super ministry of finance” and lead ultimately to the creation of a Treasury.

This would constitute a triumph for Berlin’s idea of moving towards a fiscal union as soon as possible. What Germany would put on the table as a counter-offer would be something considered taboo until now: accepting some degree of debt pooling – in stages – in search of the usual formula of European compromise.

"In a medium term perspective, the issuance of common debt could be explored as an element of such a fiscal union and subject to progress on fiscal integration,” adds the proposal, with a cautious nod toward eurobonds. In addition, the proposal contains moves towards a banking union: a common supervisory authority, the ECB, with a common guarantee fund and a bank liquidity fund (deposit insurance).

No clear timetable

Those best placed to translate the European gobbledygook are the markets. “These are the first steps towards a political and fiscal union, which are essential to get Merkel to accept something like eurobonds”, explain sources in the financial world. The same sources also point to loopholes that investors can seize in order to keep betting against the euro:


There is no clear timetable. Nor is the proposal specific enough, which suggests that deep disagreements persist. The good news is that Europe is moving forward. The trouble is that they still keep leaving everything for later: there are elections in Germany in autumn, and despite the severity of the crisis, Berlin has amply demonstrated the importance of electoral calculations.

The summit, in short, is focussing minds. This time the ball is in François Hollande’s court; he has given new life to the European project but needs to clarify how far he wants to go. Some will raise their eyebrows. Less than 48 hours before the summit, Chancellor Angela Merkel released a terse statement. “We will not fully share debts, so long as I live.”

Translated from the Spanish by Anton Baer

Eurozone crisis

Van Rompuy’s soft EU plan

European Council President Herman Van Rompuy’s highly anticipated new plan to secure the future of the eurozone is “less ambitious” and “significantly scaled back” compared to previous versions, The Financial Times reports. The plan, which effectively calls for eurozone bonds and the eventual establishment of a central EU treasury, will be debated at the June 28/29 summit, the London business daily reports. The draft:


... proposed giving EU institutions the power to rewrite national budgets and urged eurozone leaders to use their €500bn rescue fund to recapitalise European banks. While earlier drafts of the report also contained detailed short-term measures that could be taken to address the current market upheaval, the draft published by Mr Van Rompuy on the website of the European Council contains far fewer details and suggests no timetable for implementation.

[malena stool]

Don't it make you wonder just where all these vast amounts of Euros being poured into the crumbling, rotten eddifice of the common currency are going...

[Badboy]

ITALY OLDEST BANK(MPS) IS BEING BAILED OUIT TO THE TUNE OF 2BILLION EUROS.

[fuzeta]

26 June 2012 Last updated at 18:50 Share this pageEmail Print Share this page


European authorities have unveiled their vision for the future, which gives them much greater powers.

It includes the creation of a European treasury, which would have powers over national budgets.

European Commission President Jose Manuel Barroso said it was "a defining moment for European integration".

The 10-year plan is designed to strengthen the eurozone and prevent future crises, but critics say it will not address current debt problems.

This week, some markets fell sharply on fears that leaders at the EU summit on Thursday and Friday would fail to agree immediate measures to try to stem the current crisis, which has now engulfed five eurozone members.

Spain is negotiating the terms of loans worth up to 100bn euros for its banks, and the new Greek government wants to ease the terms of its huge bailout.

The governor of the Bank of England, Sir Mervyn King, expressed concern about the recent response of European authorities.

"I am pessimistic. I am particularly concerned because over two years now we have seen the situation in the euro area get worse and the problem being pushed down the road," he said, while appearing at a parliamentary hearing.

The latest document, titled Towards a Genuine Economic and Monetary Union, was released by European Council President Herman Van Rompuy and was drawn up with the presidents of the European Commission, the Eurogroup and the European Central Bank.

Eurogroup president Mr Van Rompuy said it was "not meant to be a final blueprint", but that he expected "to reach a common understanding amongst us on the way forward" at the EU summit.

Continue reading the main story “
Start Quote
It has generally been true that the European project has been driven forward when France and Germany are in step. They are not at the moment. There is a deep philosophical and political divide between them ”
End Quote
Gavin Hewitt

Europe editor

--------------------------------------------------------------------------------
Read more from Gavin

'Responsibility'

European Commission President Jose Manuel Barroso said the guiding principle was that "greater solidarity and greater responsibility must go hand in hand".

Proposals in the report included:

Limits on the amount of debt individual countries can take on
Annual national budgets can be vetoed if they are likely to mean a country exceeding its debt limits
The eurozone borrowing money collectively "could be explored"
A European treasury office to be set up to control a central budget and keep an eye on national ones
A single European banking regulator and a common scheme guaranteeing bank deposits
Common policies on employment regulations and levels of taxation
Joint decision-making with national parliaments to give it "democratic legitimacy"
One of the big changes under the new proposals is that while in the past eurozone members had to keep their budget deficits below a certain level, a European treasury would be able to force them to make changes to their budgets to keep their deficits down.

Earlier, German Finance Minister Wolfgang Schaeuble also called for there to be a European finance minister, with the power to veto national budgets as well as an elected president of Europe.

The document said greater fiscal union could lead to common debt being issued by eurozone countries.

Eurobonds, as they are known, would help weaker countries such as Spain borrow more cheaply, but they have so far been resisted in Germany, as they require stronger countries to take on the risk.
Chancellor Angela Merkel, who this week described eurobonds as "counterproductive", may have gone further on Tuesday. According to one account given to a news agency, she told a political meeting that that would be no shared debt "as long as I live".

French Finance Minister Pierre Moscovici has said leaders at this week's summit should, "lay the groundwork for the second phase of the euro".

As BBC Europe editor Gavin Hewitt points out, the area's two biggest economies "are on different pages" about how to fix the crisis.

"It has generally been true that the European project has been driven forward when France and Germany are in step.

"They are not at the moment. There is a deep philosophical and political divide between them," our correspondent says.

Others were also sceptical about what might be achieved at the summit.

"The EU summit will likely produce re-hashed plans for closer fiscal integration and a banking union but without any substantive detail of how it will actually be put into practice," said analyst Neil MacKinnon of VTB Capital.

A European treasury! Oh my God it gets worse or woman!!

[Badboy]

SOME PEOPLE WILL SAY THAT ANY UNION IS A FULFILLMENT OF BIBLICAL PROPHECY(WORLDWIDE CHURCH OF GOD ETC)

[fuzeta]

SOME PEOPLE WILL SAY THAT ANY UNION IS A FULFILLMENT OF BIBLICAL PROPHECY(WORLDWIDE CHURCH OF GOD ETC)

It's all starting to sound a bit prophetic Badboy. It's quite frightening really. It's getting a bit George Orwell 1984 !!

[Panda]

There are 4 Countries waiting in the wings for this crisis to end......they must be mad to consider joining.!!!!!!

The Euro Countries have been going for 14 years and this crisis is proof that nobody knew what they were doing , each Country was not answerable to any other Country even though they all shared the same Currency which made it impossible for any one Country facing financial difficulties to act
independently by going for quantitive easing or setting interest rates .

It will take years to reach any agreement on Political , fiscal or every Country giving up it's Sovereignty, with 17 different languages , cultures and
attitudes and in the meantime Rome burns.

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27 June 2012 Last updated at 20:10 Share this pageEmail Print Share this page


German Chancellor Angela Merkel has again rejected the idea of pooling eurozone debt through bonds and urged greater competitiveness in the EU.

She told parliament in Berlin that the proposal for "eurobonds" went against Germany's constitution.

Mrs Merkel later travelled to Paris for talks with President Francois Hollande.

In a gesture to Mr Hollande, who holds opposing views on debt, she said she hoped European leaders would adopt a 130bn-euro ($162bn) stimulus package.

Mr Hollande, who became French president on a ticket of anti-austerity, has been a strong supporter of the growth package.

Mrs Merkel said: "We have made progress toward a pact for growth, which we hope can be decided tomorrow."

The pair head to Brussels on Thursday for a two-day summit of European Union leaders regarded as crucial in tackling a growing economic crisis.

European authorities have unveiled proposals such as the creation of a European treasury, which would have powers over national budgets.

The 10-year plan is designed to strengthen the eurozone and prevent future crises, but critics say it will not address current debt problems.

Spanish Prime Minister Mariano Rajoy said on Wednesday that his country could not afford to finance itself for long at current bond rates.

Spanish 10-year government bonds have been trading at yields above 6.8%, coming close to the 7% considered unaffordable.

'Vicious circle'

Several EU leaders want individual countries' debts guaranteed by the whole eurozone, for instance in the form of centrally issued eurobonds.

Protesters parked a mannequin of Angela Merkel outside her offices in Berlin
But Mrs Merkel told parliament that eurobonds were "the wrong way" and "counter-productive", adding: "We are working to breach the vicious circle of piling up debt and breaking [EU] rules."

She said to loud applause: "It is imperative that we don't promise things that we cannot deliver. Joint liability can only happen when sufficient controls are in place."

Stronger competitiveness was the condition for sustained growth, the chancellor said.

Mr Hollande believes eurobonds should be a eurozone priority for helping countries like Italy and Spain bring their borrowing costs down.

But Mrs Merkel continues to insist that before anything is done to increase the burden on German taxpayers, building blocks towards greater fiscal, banking and, eventually, political union must be put in place.

Calls for more immediate action are growing louder by the day, the BBC's Chris Morris says.

The fear is that the markets will react very badly to another fudged summit, he adds.

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Eurozone

Germany — make the bad choice, not the disastrous one


26 June 2012
Süddeutsche Zeitung Munich Comment167

A cartoon drawing of Angela Merkel sitting on a Football was here
but it didn't copy ....explains the remark below.


"Come on, Angela, kick it back."

Nicolas Vadot


The finale of the euro has begun, warns the Süddeutsche Zeitung, and Angela Merkel will have to decide before the EU summit whether and how Germany can save the common currency.

Nikolaus Piper


The future of the euro does not depend on Italy. Nor does it depend on Spain, Portugal, Ireland, Cyprus or even Greece. How and whether the common currency survives will be decided in Germany and nowhere else: Berlin is now at the heart of the crisis.

The Treasury and the Federal Bank are surely aware of this, but the issue is a long way from being debated publicly with the necessary frankness. Only Germany can bear most of the burdens associated with saving the euro. The question is whether the Germans want to bear those burdens, and how long they still can.

In the lead-up to another bruising EU summit, German politicians and the German public have a breathing space for some sober reflections: what will the rescue of the euro still cost us, economically and politically? And what would be the price of failure – i.e., the disintegration of the eurozone – in whatever form? In either event, what risks would end up on the balance sheets of the banks and the Bundesbank? What would failure mean for Germany’s position in Europe? On the other hand, can and should the Chancellor continue to act as taskmaster of Europe?

Global depression difficult to avoid

Observers from outside Germany notice that the German debate about the euro is, to a surprising degree, a moral debate: "How did we come to such a pass that we pay the Greeks their pension at 45?" Such questions are quick to be asked, but irrelevant – not one euro has yet flowed from Germany into the Greek pension system. It is therefore time to raise the debate to an economic and a constitutional level.

The federal government must explore options for what it can and may do to rescue the currency. The boundaries of those actions are marked out by the Basic Law as much as they are by Germany’s economic power and by a German public that fears for its money and is coming increasingly to perceive the various rescue packages as a threat.

Angela Merkel’s current strategy has clearly failed in one important respect. Since 2010 she has always been just sufficiently behind the euro rescue to keep the currency, somehow, afloat. In the very understandable effort to keep her hand on the wheel, to force the partners to reform, she has bought time.

But more time has not put an end to the crisis: on the contrary, the costs have gone up, and the fear of a new and this time much more severe global financial crisis is growing. The downgrading by the Moody's rating agency of 15 globally operating banks, some by more than one notch, has sent out an alarm signal. The end-game of the Euro has already been underway for some time.

The break-up of the monetary union is now an option that has to be reckoned on – literally. From the German point of view, the consequences would not only mean that the price of the northern euro or the new D-mark, whatever the breakaway currency might be called, would skyrocket uncontrollably; it could also mean that a global depression would be difficult to avoid – and we can only speculate on the future of the EU as a whole. These days, some may wish the euro a dreadful end. It is questionable, though, whether they have any idea of just how dreadful this demise would be.

European banking policy with teeth

The rescue of the euro would also be very costly for Germany, and for France, Italy and other countries. The proposals of the IMF, the G-20 countries and many economists essentially amount to the same thing: the eurozone states have to bear at least partly in common the risks of their banking systems and their government bonds. German and Dutch depositors would be liable for Spanish accounts, German and French taxpayers for households in Rome, Madrid and elsewhere.

Without at least a limited collective European liability, the euro can no longer be defended credibly. This includes a European banking policy with teeth. Why are so many European banks undercapitalised – in contrast to the American competition? Because there is no European body that could force them to build up adequate reserves.

When to comes to the euro, the Germans are stuck between a bad choice and a disastrous choice. They should choose the bad one, and very quickly.

Translated from the German by Anton Baer




A “French style” vision of Europe

In a last minute bid to iron out the differences between Paris and Berlin in the run-up to this week’s European Council meeting, Angela Merkel is expected to meet with François Hollande at the Elysée Palace on June 27.

In Les Echos, Dominique Moïsi writes on the ongoing power struggle between the two partner countries –


In the past, Germany was perceived to be the driving force behind the European ideal. Why then has it now come to be viewed as a brake, and one whose inflexibility and unshakeable certainty that it is right could result in the implosion of Europe? How do we go about explaining this radical transformation of the perception – if not of the reality – of Germany?

Having pointed out that Europe has traditionally enabled France to “amplify its influence,” while Germany saw “the European project as a bulwark against the possible return of its internal demons,” the political analyst remarks –


When Berlin speaks of Europe today, it is referring to a “French” rather than a “German” vision of Europe. The European project no longer serves as a rampart to protect it from its own “dark side,” but as an extension of itself that is sustained by the federalism that is so natural to Germany.

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