Political and legal challenges mounted against the much-trumpeted deal struck in Brussels to save the euro, especially from Europe's center-left. François Hollande, the Socialist Party candidate who is currently the clear leader in opinion polls for the French presidential elections next year, on Monday said that he would seek to renegotiate the deal, which euro-zone leaders announced Friday morning after an all-night negotiating session.The euro-zone leaders agreed Friday to advance €200 billion ($268 billion) to the International Monetary Fund to help fund its backstop mechanisms, but put off until March a decision on raising the €500 billion cap on the resources of the European Stability Mechanism. In a note on Monday, analysts from Royal Bank of Scotland said that even in the best-case scenario, the €700 billion in combined funds that were agreed to last year would be able to fund Italian borrowing requirements for only two years, if it lost access to the bond markets the way Greece, Ireland and Portugal have. In Germany, both parliamentarians and the independently minded Bundesbank grumbled, but issued no explicit threats to bring the deal down. Bundesbank board member Andreas Dombret did, however, say the German parliament should have the right to approve or reject Germany's share of the IMF loan, which he put at around €45 billion. Traditionally, the Bundesbank has been uneasy about giving the parliament any more influence over its actions than the German constitution allows. However, Mr. Dombret expressed concern that the transfer could conflict with previous government pledges to the Bundestag that Germany's financial risk from the bailout programs would be limited. The lower house of parliament, or Bundestag, will have to deal with the decision to provide more funds to the IMF, a spokesman for German Chancellor Angela Merkel said. He didn't specify whether the Bundestag will only be informed of the measure, or will have to vote on it. Germany's eastern neighbors, Poland and the Czech Republic, also fretted on Monday that the latest deal could get very expensive for them. 
Access Investments-Building Awareness - European Union-ROMANIA
Tuesday, December 13, 2011
The Times :"Britain looks likely to be joined by Sweden outside the new bloc, doubling the strength of the outer core against an inner 25".
Political and legal challenges mounted against the much-trumpeted deal struck in Brussels to save the euro, especially from Europe's center-left. François Hollande, the Socialist Party candidate who is currently the clear leader in opinion polls for the French presidential elections next year, on Monday said that he would seek to renegotiate the deal, which euro-zone leaders announced Friday morning after an all-night negotiating session.The euro-zone leaders agreed Friday to advance €200 billion ($268 billion) to the International Monetary Fund to help fund its backstop mechanisms, but put off until March a decision on raising the €500 billion cap on the resources of the European Stability Mechanism. In a note on Monday, analysts from Royal Bank of Scotland said that even in the best-case scenario, the €700 billion in combined funds that were agreed to last year would be able to fund Italian borrowing requirements for only two years, if it lost access to the bond markets the way Greece, Ireland and Portugal have. In Germany, both parliamentarians and the independently minded Bundesbank grumbled, but issued no explicit threats to bring the deal down. Bundesbank board member Andreas Dombret did, however, say the German parliament should have the right to approve or reject Germany's share of the IMF loan, which he put at around €45 billion. Traditionally, the Bundesbank has been uneasy about giving the parliament any more influence over its actions than the German constitution allows. However, Mr. Dombret expressed concern that the transfer could conflict with previous government pledges to the Bundestag that Germany's financial risk from the bailout programs would be limited. The lower house of parliament, or Bundestag, will have to deal with the decision to provide more funds to the IMF, a spokesman for German Chancellor Angela Merkel said. He didn't specify whether the Bundestag will only be informed of the measure, or will have to vote on it. Germany's eastern neighbors, Poland and the Czech Republic, also fretted on Monday that the latest deal could get very expensive for them. 
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Morning all,
Well, I thought last Friday's 17+9 proposal was going to get more interesting, and here it is... (I entered the relevent text in bold)
1. Reuters (Monday December 12 2011): "Moody's Investors Service said on Monday it still expects to review its ratings on all European Union sovereign credit in the first quarter of next year, adding that last week's agreement by European policymakers offered few new measures to resolve the region's debt crisis"; and,
2. Telegraph (Monday December 12 2011):"Bundesbank rejects Europe's IMF funding ruse: Germany's Bundesbank has raised serious objections to EU summit plans to shore up Italy and Spain by channelling up to €200bn (£170bn) from central bank reserves through the International Monetary Fund (IMF)".
With S&P, and now Moody's entering in on the credit ratings side of the issue, and the Bundesbank pouring cold water on last Friday's 17+9 proposal from Germany's side, which way can they move next.
Also, Obama has said "Europe is wealthy enough that there is no reason why they can't solve this problem. It's not as if we are talking about some impoverished country that doesn't have any resources.".
I'm not prone to making a prediction on the future of the Euro/EZ/EU, but it's looking like a tighter and tighter race to finish for the EZ/EU, regardless of the outcome.
Also, a known FX trader has forecast that the Euro will be at parity with the USD in the next few month - not helpful on the debt side of things if time is not on your side.
I would have thought by now that someone would have realised that there is a perfectly good explanation as to why Cameron used the veto.
If he had signed up then like or lump it he would have had to give in to a referendum knowing that this would have had no chance of getting a yes vote which would have sunk the whole deal.
This way the EU can go ahead with the changes, find some 'legal' way to avoid Ireland et al having to hold a referendum, especially since it is now not a new treaty, and then the UK can find a way of coming back on board.
All of the anger and angst is just a show.
3.11pm: Just hitting the newswires now -- rating agency Fitch has downgraded its growth forecasts for 2012, and predicting a very bleak year for the eurozone.
Fitch now reckons that the eurozone will grow by a paltry 0.4% during the next 12 months. It blamed "increased fiscal austerity measures and deteriorating financial market conditions", leading to a squeeze on credit.
Italy is likely to fare particularly badly. Fitch predicted that its economy will contract throughout the year - as Mario Monti starts to implement economic reforms and cutbacks.
Fitch also warned that the "probability of unfavourable outcomes is high" - not only could the eurozone crisis worsen, efforts to cut America's deficit could also stumble. In short:
Downside risks dominate at this current junctureAn unnamed diplomat has told Reuters that EU ambassadors were briefed by the European Council's head of legal services this morning. They were told to expect to see an initial version of the treaty well before Christmas:
(He) told the 27 ambassadors this morning that a first draft will be ready by the end of the week, at the latest early next week.
That would be quicker than some of the early estimates -- although there have also been rumours that versions of the new fiscal compact were already being circulated.
With the euro dropping to $1.322 this afternoon (down one and a half cents against the US dollar), the EU remains under pressure to present the details of the plan quickly.
Although, as Financial Times markets editor Christopher Adams pointed out on Twitter, "if EU lawyers are used, there'll be trouble" (thanks to a certain veto).
Fresh coalition splits have emerged as Downing Street indicated it may block the euro-group countries from using EU institutions – including its buildings – to plan co-ordination of the eurozone.
A Number 10 spokesman also said UK demands for a level playing field for UK financial services remained the UK objective.
The deputy prime minister, Nick Clegg, in his interview with Andrew Marr on Sunday, said: "Well it would be ludicrous for the 26, which is pretty well the whole of the European Union with the exception of only one member state, to completely reinvent or recreate a whole panoply of new institutions."
He added the euro-group member states "had already said that there's going to be some crossover between institutions that we all share".
Clegg appears to be eager to use the future discussions about the inter-governmental agreement, and its relationship with the EU institutions, such as the European Court of Justice, to try to undo what he regards as the damage of Friday's talks.
But the prime minister's spokesman indicated Britain was going to make sure that nothing happened that meant the existing treaty was cut across or rolled back by allowing the 17 to use EU institutions.
He said "we are in uncharted territory", adding there was "a potential conflict of interest" if the EU institutions were serving two masters, the 17 strong euro-group and the 27 members of the EU at the same time.
He added: "They made a decision last week to push ahead with an inter-governmental agreement, and this is a 'treaty within a treaty'. He said discussions about how this inter-governmental agreement will be implemented had just started.
"There is a discussion going on in Brussels about how this inter-governmental agreement should be implemented, and we will be involved in these discussions. We would be concerned about confusion of roles, conflicts of interests, and we need to explore these."
He said one of the issues was whether the 17 could use the EU buildings in Brussels to hold its discussions.
He insisted Britain had not been seeking a carve-out from EU financial services directives, but merely a level playing field, and said Britain would continue to have that objective, but these discussions may take place in a different forum and a different context in Ecofin.
"We were looking to see whether we could use this proposal for a treaty of 27 to deal with some of those issues, but we will continue to pursue the same objectives," the prime minister's spokesman said.
He admitted there were disagreements within the coalition on Europe, but said David Cameron had taken Nick Clegg through the UK negotiating strategy before he went to Brussels.
He also insisted that Cameron had made it clear in public and private that he would wield the veto if he did not secure his objectives in the talks.
He said Cameron had contacted both Clegg and the chancellor, George Osborne, in the early hours to discuss the outcome of the talks.
Downside risks dominate at this current junctureAn unnamed diplomat has told Reuters that EU ambassadors were briefed by the European Council's head of legal services this morning. They were told to expect to see an initial version of the treaty well before Christmas:
(He) told the 27 ambassadors this morning that a first draft will be ready by the end of the week, at the latest early next week.
That would be quicker than some of the early estimates -- although there have also been rumours that versions of the new fiscal compact were already being circulated.
With the euro dropping to $1.322 this afternoon (down one and a half cents against the US dollar), the EU remains under pressure to present the details of the plan quickly.
Although, as Financial Times markets editor Christopher Adams pointed out on Twitter, "if EU lawyers are used, there'll be trouble" (thanks to a certain veto).
Fresh coalition splits have emerged as Downing Street indicated it may block the euro-group countries from using EU institutions – including its buildings – to plan co-ordination of the eurozone.
A Number 10 spokesman also said UK demands for a level playing field for UK financial services remained the UK objective.
The deputy prime minister, Nick Clegg, in his interview with Andrew Marr on Sunday, said: "Well it would be ludicrous for the 26, which is pretty well the whole of the European Union with the exception of only one member state, to completely reinvent or recreate a whole panoply of new institutions."
He added the euro-group member states "had already said that there's going to be some crossover between institutions that we all share".
Clegg appears to be eager to use the future discussions about the inter-governmental agreement, and its relationship with the EU institutions, such as the European Court of Justice, to try to undo what he regards as the damage of Friday's talks.
But the prime minister's spokesman indicated Britain was going to make sure that nothing happened that meant the existing treaty was cut across or rolled back by allowing the 17 to use EU institutions.
He said "we are in uncharted territory", adding there was "a potential conflict of interest" if the EU institutions were serving two masters, the 17 strong euro-group and the 27 members of the EU at the same time.
He added: "They made a decision last week to push ahead with an inter-governmental agreement, and this is a 'treaty within a treaty'. He said discussions about how this inter-governmental agreement will be implemented had just started.
"There is a discussion going on in Brussels about how this inter-governmental agreement should be implemented, and we will be involved in these discussions. We would be concerned about confusion of roles, conflicts of interests, and we need to explore these."
He said one of the issues was whether the 17 could use the EU buildings in Brussels to hold its discussions.
He insisted Britain had not been seeking a carve-out from EU financial services directives, but merely a level playing field, and said Britain would continue to have that objective, but these discussions may take place in a different forum and a different context in Ecofin.
"We were looking to see whether we could use this proposal for a treaty of 27 to deal with some of those issues, but we will continue to pursue the same objectives," the prime minister's spokesman said.
He admitted there were disagreements within the coalition on Europe, but said David Cameron had taken Nick Clegg through the UK negotiating strategy before he went to Brussels.
He also insisted that Cameron had made it clear in public and private that he would wield the veto if he did not secure his objectives in the talks.
He said Cameron had contacted both Clegg and the chancellor, George Osborne, in the early hours to discuss the outcome of the talks.
German lawmakers from Angela Merkel's coalition want more say in agreements made with European partners, a paper seen by Reuters and to be presented to MPs says.
It calls on the government to inform and consult parliament when they deal with EU issues or involve the use of EU institutions - and seems aimed at ensuring parliament has a say in a proposed new treaty for deeper economic integration in the eurozone.
He (or she) who pays the piper calls the tune.
Ireland, Portugal, Spain, Greece and Italy could all have told Merkel to bugger off and defaulted on all their debt, forcing Merkel to bail out her own banks (and probably France's too).
Instead they went for a freezing cold austerity shower in Reichskanzlerin Merkel's Temple of Germanic Financial Orthodoxy and now find themselves locked in a Teutonic death-grip with German financial "experts" flown in to occupy their treasuries.
No way out now, game over suckers. Enjoy all future decisions in Europe being made for the benefit of das Vaterland.
Spain will be a key focus today, not only because its parliament is meeting for the first time since the election.
Credit Ratings Agency Moody's has also just put eight Spanish banks on review for possible downgrade.
The banks are: Banco Cooperativo, Banco Sabadell; Bankia and its holding company, Banco Financiero y de Ahorro (BFA); Bankinter, CaixaBank and its holding company, La Caixa; Confederacion Espanola de Cajas de Ahorro (CECA); Caja Rural de Granada; Ibercaja Banco; and Lico Leasing.
Because of the weaker expectations for Spanish growth, the banks' income will be smaller, Moody's said. In addition it sees "increased loss expectations with respect to their commercial real estate exposure".
Separately, Moody's has downgraded the subordinated debt of 21 Spanish financial institutions.
In addition, Spain is going to the debt markets today, just as yields on its debt are also rising. Spanish 10-year bonds are up 10 basis points this morning to 5.9%.
Spain will be a key focus today, not only because its parliament is meeting for the first time since the election.
Credit Ratings Agency Moody's has also just put eight Spanish banks on review for possible downgrade.
The banks are: Banco Cooperativo, Banco Sabadell; Bankia and its holding company, Banco Financiero y de Ahorro (BFA); Bankinter, CaixaBank and its holding company, La Caixa; Confederacion Espanola de Cajas de Ahorro (CECA); Caja Rural de Granada; Ibercaja Banco; and Lico Leasing.
Because of the weaker expectations for Spanish growth, the banks' income will be smaller, Moody's said. In addition it sees "increased loss expectations with respect to their commercial real estate exposure".
Separately, Moody's has downgraded the subordinated debt of 21 Spanish financial institutions.
In addition, Spain is going to the debt markets today, just as yields on its debt are also rising. Spanish 10-year bonds are up 10 basis points this morning to 5.9%.
Several countries that don't use the common currency feel they shouldn't need to adhere to the same restrictions as those that do. And some less well-off countries resent having to help bail out more-affluent neighbors. Jaroslaw Kaczynski, the leader of Poland's main opposition party, lays flowers Tuesday before a demonstration in Warsaw. On Tuesday, the leaders of Sweden and the Czech Republic said it was too early to count on their countries' support, which they said was impossible to predict before the particulars of the agreements were finalized. In Hungary, the parliament has yet to consider the matter. "There are many complicated questions and we must wait for the full details before making a decision," Czech Prime Minister Petr Necas said Tuesday. In Sweden, Finance Minister Anders Borg said, "We must continue to evaluate what it is that has been agreed. It is clear that Sweden will not enter this cooperation on the same terms as euro-zone members." In Poland, Jaroslaw Kaczynski, the leader of the opposition Law and Justice party, and a former prime minister, addressed protesters gathered near the gates of the Polish president's official residence and lashed out at the government's vocal support for the EU measures. "This undermines our status as a sovereign state, our position, our dignity," Mr. Kaczynski said. "We can't agree to this. We can't, we can't and we won't."
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