eurozone – Page 8 – Slugger O'Toole

Euro crisis: “When it becomes serious, you have to lie.”?

Pete Baker on May 19, 2011, 3:55 pm

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Another article, to add to those noted by Mick, on the wider economic and political considerations being argued in the eurozone. At the Guardian, Nuno Monteiro and Eduardo Sousa warn While a growing number of analysts recognise the likelihood of sovereign-debt defaults across Europe’s periphery in the next few years, the continent’s political and financial elites continue to see restructuring as the third rail of financial options. Despite all signs that the euro may be set on an implosion course, the EU …

Euro crisis: “It would raise incredible doubts about our credibility if we simply were to change the rules…”

Pete Baker on May 17, 2011, 3:45 pm

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With EU finance ministers pondering the future for Greece, and European officials publicly disagreeing on the possiblity of the rescheduling/restructuring of sovereign debt, Frau Bundeskanzerlin has decreed that there will be no sovereign default in the euro zone before 2013. As ministers prepared to tackle the increasingly precarious financial situation in Greece, Dr Merkel made clear her resistance to any debt restructuring by the country. Addressing students in Berlin, Dr Merkel said private sovereign creditors should not bear losses until …

Euro crisis: “This requires a political as well as an economic understanding of the dynamics in play at European and national levels”

Pete Baker on May 14, 2011, 8:57 pm

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In identifying three alternative European solutions, rather than the “lethal injection” of unilateral action by Ireland, Paul Gillespie in the Irish Times highlights the wider issues in play. IRELAND BADLY needs a strategy to handle the euro zone crisis, rather than reacting defensively to all its latest twists and turns. This requires a political as well as an economic understanding of the dynamics in play at European and national levels. Most economists here are ill-equipped to provide this because they take …

EU crisis: “the question is whether all this can be kept under control.”

Pete Baker on May 13, 2011, 9:13 pm

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EU leaders will discuss the proposed revision of the Schengen agreement at a summit next month, as prompted by France and Italy – although the Guardian reported that, at a meeting of EU interior ministers, “15 of the 22 EU states which had signed up to Schengen supported the move, with only four resisting”. Meanwhile, the European Commission President, José Manuel Barroso, has written a strongly worded letter to the Danish prime minister, Lars Lokke Rasmussen, warning against the Danish Government’s proposals to unilaterally re-introduce …

“We can’t separate Denmark’s announcement from the wider context of what we’ve been seeing the past few weeks”

Pete Baker on May 11, 2011, 11:02 pm

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Another example of domestic political pressure potentially impinging on the “European project”. This time in Denmark, a member of the Schengen zone, where the government has announced the re-introduction of border guards and spot checks “designed to fight crime and illegal immigration”. From the Wall Street Journal report In Denmark, the issue of tighter border control has become a political bargaining chip. The governing center-right minority government, which consists of a coalition between the Conservatives and liberal-right party Venstre, wants to …

Robert Peston: “it will be squeaky bum time in government buildings all over Europe.”

Pete Baker on May 11, 2011, 2:54 pm

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The BBC’s business editor, and still everyone’s hero, Robert Peston, identifies the reasons why Europe continues to prescribe medication, rather than opting for untested, and risky, surgery. At least for now. From the Peston’s Picks blog There seem to be three reasons. First, in Germany, it is apparently politically more acceptable to provide rescue finance to Greece directly than to rescue German banks that foolishly and greedily bought Greek debt for its relatively high yield. Second, a Greek debt restructuring would …

Euro crisis: “This is Europe’s awful dilemma. The patient is the euro.”

Pete Baker on May 10, 2011, 3:47 pm

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Taoiseach Enda Kenny has warned that Dr Doom Morgan Kelly’s prescription for Ireland would deliver “a lethal injection to the Irish economy“. At the Guardian’s Ireland Business blog, Stephen Kinsella, in part one of a two-part post, identifies some of the implications of “an immediate balancing of the books”. The fiscal problem is pretty clear. There is a big gap between what Ireland spends, and what she makes. Including promissory notes, the Irish government has been taking in roughly €53.3bn and spending …

Euro crisis: “The “European project” won’t go quietly into the night…”

Pete Baker on May 9, 2011, 3:03 pm

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Whilst the Irish Government waits for “the right time” to play whatever cards they think they have, Greece is still in the vanguard of the PIGS. As the BBC Europe editor, Gavin Hewitt, points out To the issue that caused a tremor in the markets on Friday: that Greece may opt to leave the euro. It has been met with fierce denials. For the moment it seems a highly unlikely option. And yet in German circles it is being discussed. In …

Euro crisis: “the EU is setting itself up for failure”

Pete Baker on April 26, 2011, 4:06 pm

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In a lengthy article posted at Crooked Timber, John Quiggin and Henry Farrell argue that By concentrating on its economic problems but ignoring their political consequences, the EU is setting itself up for failure. The case for austerity does not make sense. And if the EU fails to deal with the political fallout of its own institutional weaknesses, it is going to collapse. No political body can force voters to repeatedly shoulder the costs of adjustment on their own and expect …

Finland goes to the polls

Pete Baker on April 17, 2011, 6:47 pm

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Finland’s general election today represents one of those domestic political pressures, in Ireland and elsewhere, I mentioned which could have much wider ramifications. As RTÉ reports The reason the outcome of this election is being watched so closely is that Finland’s parliament has the right to vote on EU bailouts, such as the one currently being negotiated between Portugal and EU and IMF officials. And as EU rules state that any bailout must be approved unanimously by all 17 eurozone members, …

Euro crisis: “The Government is due to consider a potential programme of asset disposals…”

Pete Baker on April 16, 2011, 4:30 pm

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Greece were the first of the PIGS to request a EU-IMF bail-out – with the threat of contagion, as Mack’s timeline records, leading to the construction of a wider mechanism which Ireland, eventually, availed of. The result, according to ECB executive Lorenzo Bini Smaghi, of the “choice of economic model” by “successive governments, and their voters”. As Tim Garton Ash commented at the time, “The crisis of the eurozone has only just begun.” A year on and, as BBC Europe editor Gavin Hewitt noted …

“What is clear is that Dublin’s perspective will not be the defining one.”

Pete Baker on April 5, 2011, 4:44 pm

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In his Irish Times European Diary Arthur Beesley sketches out the domestic political pressures elsewhere which may hinder the Irish Government’s attempt to renegotiate the terms of their bail-out. From the Irish Times article In Portugal, fellow socialist Jose Socrates talked himself into an early election a few weeks ago by failing to win support for a new austerity drive. The country is said to be in a funk of despair over the prospects of a bailout. Look northwards from Spain …

“The net point is that Ireland’s lenders retain all the power…”

Pete Baker on April 1, 2011, 9:01 pm

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With tensions rising across Europe, in the Irish Times Arthur Beesley maps out the territory as the Irish Government prepares to attempt to tentatively restart the debate on reducing Ireland’s bail-out interest rate. As noted previously, Arthur Beesley has highlighted some of this territory before The Government’s position is not at all strong, so repeated claims that the situation is now so grave as to merit pursuing senior bonds serves to emphasise the requirement for something else to ease the pain. Important …

A momentous day for Ireland and the eurozone

Brian Walker on March 31, 2011, 10:14 am

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Spelling out the full horror of it, Robert Peston describes a crisis even deeper than publicly admitted. The one glimmer of hope is that the rich States of the EU and other major investors now admit they are intimately implicated. Rather than presenting themselves as strict but magnanimous bailers out of little Ireland, they are gradually being forced to recognise their self-interest in a better system to protect ther own savers who invested in Ireland in the first place. And yet the final form of that recognition …

“What will be the end of this sorry saga?”

Pete Baker on March 30, 2011, 4:30 pm

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With tensions rising across Europe, Irish Life and Permanent suspended trading earlier today amid speculation that it would have to sell its profitable pensions and investments business, Irish Life, and its fund management business, Irish Life Investment Managers, after the publication of the bank stress test results tomorrow. That publication is also expected to result in further nationalisation of the Irish banking sector with the banks expected to need “as much as 30bn euros ($42bn; £26bn) in additional capital”. The BBC’s Robert Peston, …

Euro crisis: “The fix is not in. A line has not been drawn. And tensions are rising.”

Pete Baker on March 25, 2011, 7:59 pm

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What to make of the news emerging at the end of the two-day EU summit in Brussels? It depends. The RTÉ report tells us The EU is battling to stem a debt crisis that has raged for over a year and led Ireland and Greece to accept bailouts. It had promised to unveil a comprehensive solution at this summit that it hoped would reassure jittery markets. But the abrupt resignation of Portuguese Prime Minister Jose Socrates on the eve of …

Euro crisis: “If Portugal asks, we will be ready to intervene…”

Pete Baker on March 24, 2011, 6:59 pm

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To the apparent outrage of some, last night Taoiseach Enda Kenny agreed to defer seeking a conclusion to talks on reducing Ireland’s bail-out interest rate at the two-day EU summit in Brussels. At the IIEA blog, Karl Whelan argued After a lot of fighting talk about renegotiation during the recent election campaign, the new Irish leader Enda Kenny probably feels a certain amount of pressure to come home from this summit with a deal on the interest rate. My advice, for what …

“The result is a crisis in European democracy”

Pete Baker on March 14, 2011, 4:06 pm

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On the back of a survey of more than 5,000 people of working age in the UK, Germany, France, Poland and Spain, the Guardian editorialises on the future of the EU. They’re promising a month long series of articles mapping out the social, political and economic terrain. From the Guardian editorial The poll we publish today is taken from a sample of more than 5,000 people of working age in the five leading EU states – Britain, France, Germany, Spain and …

“Corporation tax is now mentioned as a quid pro quo”

Pete Baker on March 12, 2011, 1:15 pm

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Encouraging noises are one thing, but at the first EU late nighter of Taoiseach Enda Kenny’s tenure the BBC reports some possibly premature tweeting from EU President Herman Van Rompuy. In a message on Twitter, Mr Van Rompuy had initially said: “We have an agreement on the Pact for Euro.” The message was later amended to: “Update from ongoing meeting: Agreement in principle on the Pact for the Euro, but still discussing the other elements of the package.” A pact would …

Euro crisis: “Expect some late nights.”

Pete Baker on March 8, 2011, 11:35 pm

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More encouraging noises for the incoming Taoiseach from the European Union’s economic and monetary affairs commissioner, Olli Rehn. As the Irish Times reports “I can see that there is a case to reduce the interest rates paid by Greece and Ireland,” the commissioner said. “In that context, it is important that we also look at loan maturities so that we can go beyond the hump of 2014 and 2015 and that also contributes to debt sustainability . . . The essential …