Euro Crisis: “Germany is not pursuing these manoeuvres out of malice…”

As Pete noted yesterday, things are never quite as they seem with the Eurozone. Paul Krugman writing in today’s New York Times bemoans the shortsightedness of Europe’s politician, but in it he makes an important category error when he describes the ECB as the European equivalent of the Fed… But he does suggest what has previously been thought unthinkable: “…in the 1930s — an era that modern Europe is starting to replicate in ever more faithful detail — the essential … Read more

Jean-Claude Trichet: “It is not a question of technique. It is a question of will and determination.”

At the Telegraph blog, Andrew Lilico takes his life in his hands to ask, “Is it time for the eurozone to turn into a Single European State?”  A key point he makes, I’d suggest OK – so what do we do, if we don’t want to break up the euro altogether? First, we have to accept (a) that this is fundamentally a political project, a precursor to a Single European State, and must be accepted as such by all its … Read more

Van Rompuy: “Our agenda will be the financial stability of the euro area as a whole…”

European Council President Herman Van Rompuy has called an emergency summit of divided euro zone leaders on Thursday to address the existential European debt crisis.  From the Irish Times report “Our agenda will be the financial stability of the euro area as a whole and the future financing of the Greek programme,” said Mr Van Rompuy in a brief statement last night. “I have asked for the preparatory work to be brought forward inter alia by the finance ministries.” And they … Read more

Van Rompuy: “Europe is still sexy…”

So sayeth the President of the European Council, Herman Van Rompuy, as the BBC Europe editor Gavin Hewitt notes Europe’s leaders are unsettled, scratchy. Old certainties have given way to anxiety. The open road to ever closer union is now strewn with boulders. You can gauge the ebbing confidence from remarks that didn’t need to be made. “Europe is still sexy,” declared President of the European Council Herman Van Rompuy. “As long as a club attracts new members,” he added, “it is … Read more

Jean-Claude Juncker: “The sovereignty of Greece will be massively limited.”

After the Greek parliament voted to give everyone more time to come up with a  better solution, Eurozone finance ministers agreed to release the promised €12billion to Greece to avoid an immediate default. But those same finance ministers have now delayed discussions on the details of a second bail-out for Greece, thought to be around 120bn euros, needed to pay the bills until the end of 2014.  According to an Irish Times report today, the Greek finance minister Evangelos Venizelos has stated, “Euro Group decided through a … Read more

Euro crisis: “gaining time is the least bad outcome, both for Greece and Europe as a whole”

In the midst of a 48 hour general strike, and with police clashing with protestors on the streets, the Greek Prime Minister, George Papandreou, won the first of two crucial votes on the latest package of tax hikes, spending cuts, and privatisations.  By 155 votes to 138. But as the BBC Europe editor, Gavin Hewitt, wrote before today’s vote But here’s the thing. No one in Greece believes the tax increases, lay-offs, privatisations will ever be fully implemented. This morning I … Read more

Euro crisis: Come on in, the water’s lovely…

Croatia got an invite to join the European Union party, as EU leaders cornered the under pressure Greek Prime Minister, George Papandreou, ahead of next week’s crucial Greek parliamentary vote on the latest bail-out.  Arthur Beesley in the Irish Times FOR THE fourth time this year, EU leaders gathered in Brussels last night to plot the next step in the sovereign debt emergency. They have declared victory many times before. None is inclined to suggest they are winning now. The mood … Read more

Sarkozy: “Without the euro there is no Europe…”

That was the exaggarated claim of French President Nicolas Sarkozy as Frau Bundeskanzerlin blinked over her demand that private bondholders be made to share the burden of a ‘Greek miracle’ second Greek bail-out.  Although where that leaves the Bundestag is another matter… And now that the French and German leaders are in agreement it’s down to the Greek Prime Minister George Papandreou to forge a domestic political consensus.  Or not. A new political contract is essential for Greece to survive the current crisis. For this contract … Read more

Euro crisis: “If fiscal union is not on the cards, the only other option is eurozone breakup”

In the Irish Times, Dan O’Brien provides a bleak assessment of the Greek problem at the heart of the current euro crisis.  From the Irish Times article The chances of things getting worse are high. Societal strains and rampant corruption do not in themselves cause economic weakness – just look at China and India – but they don’t help. Alas for Greece, even if both problems were to disappear tomorrow there is little reason to believe its economic rot would stop. … Read more

Euro crisis: “it is the fear of the unknown that is holding sway”

Frau Bundeskanzerlin has been to Washington, to pick up her Presidential Medal of Freedom.  And to smooth over the ruffled feathers of that transatlantic relationship.  As he handed over the medal, US President Barack Obama warned of the danger of the Euro debt crisis impacting the global economy, and in particular, the US economy.  He might be looking for a handy scapegoat in the months ahead… But as, still everyone’s hero, Robert Peston points out “America’s banks would seem to have a good … Read more

Euro crisis: “categorically there will be absolutely no bailout next year in Ireland”

A series of Irish government ministers have been clarifying their position after the Minister for Transport, Leo Varadkar, appeared to suggest that a second bail-out could be required for Ireland next year. Minister for Finance Michael Noonan “The programme is due to run until the end of 2013 and the start of 2014 and there is sufficient money in the programme to meet all eventualities so categorically there will be absolutely no bailout next year in Ireland,” Mr Noonan stated. “The … Read more

Euro crisis: “Politicians have become sheep, not leaders”

In today’s Irish Times Paul Gillespie returns to the topic of the political dynamics in play at European and national levels during this euro crisis.  From the Irish Times article Ireland is doubly unlucky. Not only is France prepared to play hardball, but there is also no good reason for it to calculate its interests are being damaged by Ireland’s corporation tax rate to any real extent. It is impossible to get a good explanation from any French person as … Read more

Euro crisis: “Europe has been producing its usual cacophony of voices in the past few days”

BBC Europe editor, Gavin Hewitt, has been looking at Spain in the aftermath of defeat for the prime minister José Luis Rodríguez Zapatero’s ruling socialist party in municipal and regional elections.  From Gavin Hewitt But nerves are back. In weekend elections the governing Socialist party took a thrashing. Even in strongholds like Seville and Castilla-La Mancha it was defeated. There is a pattern emerging in Europe. Given a chance, the people turn on the incumbents. In Spain national elections do not … Read more

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

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 … Read more

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

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 … Read more

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

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 … Read more

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

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 … Read more

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

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 … Read more

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

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 … Read more

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

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 … Read more