Sarkozy: “We have to converge. The status quo is impossible.”

Frau Bundeskanzlerin and the French President, Nicolas Sarkozy, emerged from their bunker yesterday to call for “true economic governance” for the eurozone.  As Derek Scally reports in the Irish Times Mr Sarkozy and Chancellor Angela Merkel presented joint proposals for further reforms and euro zone integration after meeting in Paris yesterday, calling them essential steps to end ongoing instability. “To strengthen the euro as our common currency, it is clear that we will need a closer interlocking of economic and financial …

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Euro crisis: “Que Sera Sera…”

The European Central Bank’s “sticking plaster” appears to have had the desired effect of alleviating pressure on Spanish and Italian government bonds.  For now.  As BBC business editor, and still everyone’s hero, Robert Peston, observes It would have been utterly disastrous if there had been any other outcome. Because – for the avoidance of any doubt – the ECB is taking a substantial reputational and financial risk in buying the debt of these nations: many will see the ECB as …

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Euro crisis: “The euro area crisis has reached end game…”

The Italian finance minister, Giulio Tremonti, has held crisis talks with  Jean-Claude Juncker, chair of the Eurogroup of finance ministers.  The Spanish Prime Minister,  Jose Luis Zapatero, “has postponed the start of his holidays” to keep “an eye on the international economic situation.”  Both countries’ bond yields have reached their highest rates in 14 years, and are considered to be at unsustainable levels.  As the Guardian reports, the stock markets have taken fright “as fears grew over the health of the global …

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Euro crisis: Back from the brink?

Well, perhaps…  Eurozone leaders emerged from their emergency summit yesterday offering a new €109billion bail-out for Greece with twice as long to pay it back [30 years] at a lower interest rate than before.  It’s a “restricted default event”, according to ratings agency Fitch.  The draft agreement in full is here [pdf file]. Ireland and Portugal get an interest rate cut too – Karl Whelan’s busy at Irish Economy calculating what it means for Ireland.  But the private sector involvement in Greece …

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Barroso: “Nobody should be under any illusion: the situation is very serious”

Everyone’s got something to say ahead of tomorrow’s emergency EU summit on the existential European debt crisis.  Whether you believe any of them is another matter entirely… Taoiseach Enda Kenny is echoing Frau Bundeskanzlerin. Taoiseach Enda Kenny has said he is also hopeful that Ireland will be on the agenda at tomorrow’s meeting. However, in a statement issued today, Mr Kenny said he did not believe the meeting would solve all of the euro zone’s problems. “The crisis in the euro area …

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Euro crisis: “everything those leaders have done, after large amounts of dithering, has ended up making the situation worse.”

That’s the BBC economics editor Stephanie Flanders quoted above, by the way.  Which brings me back to Thursday’s emergency summit called by European Council president, Herman Van Rompuy “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. [Friday 15th July] Perhaps…  But Frau Bundeskanzlerin, who reportedly wasn’t as keen on the summit being called, has been playing down expectations …

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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 …

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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 …

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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 …

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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. …

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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 …

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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 …

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Euro crisis: “everyone thought everyone else would back down at the last minute…”

Writing in the Guardian, Paul Mason covers similar territory to my post last night [But in a more coherent manner? – Ed].  You might very well think that…  ANYhoo… He opens with this In the summer of 1914 the Austrian novelist Stefan Zweig was on holiday in Ostend with fellow writers and artists. One afternoon, noticing the sudden appearance of uniformed soldiers on the promenade, they buttonholed an officer: “Why all this stupid marching around?” It was 3 August: war was …

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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 …

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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 …

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

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 …

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“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 …

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“The prize of going down in history as the government that brought about the end of Eta must be tempting”

The Irish Times‘ Paddy Woodworth reports on the latest developments following ETA’s declaration of a “permanent, general, and internationally verifiable” ceasefire.  From the Irish Times report A document leaked to the Spanish newspaper El País at the weekend appears to confirm that Eta is still locked into the dogma that “armed struggle” will remain an essential element in the pursuit of Basque independence. According to the paper, a resolution passed by the group, following an internal debate after its initial ceasefire declaration …

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Angela Merkel: “We will do what is necessary, everything else will be discussed step by step”

Eastern promises aside – and isn’t there something about beware [metaphorical] Greeks bearing gifts? – Portugal’s visit to those reluctant bond markets is described as “successful” by this Reuters report at the Irish Times –  €1.25 billion raised with the ten year yield kept below 7%. But as the BBC report points out Bond buying by the European Central Bank (ECB) had helped keep the yield below 7%. “Probably the most important thing for the 10-year yield is that the 7% level …

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“the euro crisis had a Christmas break, but it’s back”

With Portugal heading back to an increasingly reluctant bond market, the BBC’s Europe editor, Gavin Hewitt, notes that “White knuckles have re-emerged in Brussels and other vulnerable European capitals.” Sometimes in Brussels I detect that the fight is less to save Portugal but more to ring-fence Spain. It’s the fourth-largest economy in the eurozone. If it needed rescuing the funds currently are probably not there. And then awkward questions would have to be asked – including whether Germans, in those …

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