IMF chief, Christine Lagarde, wants the European Stability Mechanism to embrace funds still untouched within the current rescue fund, the European Financial Stability Facility (EFSF). Germany threatened to undermine this week's €130bn (£110bn) deal to bail out Greece by refusing to bolster the firewalls set up to prevent the eurozone debt crisis from spreading. As markets dipped all over Europe amid fears that Greece would never be able to meet its debt obligations, Angela Merkel's chief spokesman said Berlin saw "no necessity" to enhance the planned €500bn European stability mechanism (ESM), the new bailout fund due to be in place from July. Highlighting how unpopular aid for Greece is in Germany, opposition to the bailout deal was growing within Merkel's coalition on Wednesday. Several MPs from Merkel's conservatives and her junior partner, the Free Democrats (FDP), said they planned to oppose the package, meaning that she would be unlikely to win next week's parliamentary vote on the deal without the humiliation of relying on her socialist and green opponents . The European Financial Stability Facility (EFSF) was created by the euro area Member States following the decisions taken on 9 May 2010 within the framework of the Ecofin Council. The EFSF’s mandate is to safeguard financial stability in Europe by providing financial assistance to euro area Member States. EFSF is authorised to use the following instruments linked to appropriate conditionality:-- Provide loans to countries in financial difficulties
-- Intervene in the debt primary and secondary markets.
-- Intervention in the secondary market will be only on the basis of an ECB analysis recognising the existence of exceptional financial market circumstances and risks to financial stability
-- Act on the basis of a precautionary programme
-- Finance recapitalisations of financial institutions through loans to governments
To fulfill its mission, EFSF issues bonds or other debt instruments on the capital markets. EFSF is backed by guarantee commitments from the euro area Member States for a total of €780 billion and has a lending capacity of €440 billion. EFSF has been assigned the best possible credit rating by Moody’s (Aaa) and Fitch Ratings (AAA). EFSF has been assigned a AA+ rating by Standard & Poor’s. EFSF is a Luxembourg-registered company owned by Euro Area Member States. It is headed by Klaus Regling, former Director-General for economic and financial affairs at the European Commission.
14 comments:
The German tabloids and media treat the Greek people in exactly the same way i.e. thieves, lazy bastards, corrupted, everyone retires at 40, etc ... The Media always try to manipulate the people in maintaining a certain attitude towards the Greeks, the Germans etc. Not mentioning how Greeks are treated when they are abroad, especially in Germany. Trust me, it's not a really nice thing hearing everyday that we are failed and corrupted State and we should sell our islands and Acropolis to pay our debts! Sell it whom exactly? These monuments and this Land have survived for more than 2000 years now.
Everyone keeps talking as if money are going directly from European citizens to pay Greece's debt? On the contrary, Greece is currently paying a substantial amount of interest to the donor countries, whose tax revenues have not been needed yet. Don't you realise that the future of the Banks and financial institution is what matters most nowadays? Are you aware of the unemployment rates in the lazy Southern countries? Are you aware that students pass out in the schools because their parents cannot provide them with the basic breakfast? Are you aware of how many people queue on a daily basis outside the church to get basic 'Lebensmittel'?
Greeks are responsible for many of the bad things currently going on in the Country, but they are not responsible for Europe's mistakes.
Now tell me, where is solidarity towards the people of this World?
Oh please,what kind of endless hypocrisy is this.Ambrose is preaching about QE,printing money and M1,2 & 3 collapse all over Europe and now all of a sudden its wrong.The Anglo-American experts have been talking of our evil monetary Bundesbank purism and how the Fed and BoE are doing the right thing and the ECB must QE Europe to the orbit Jupiter.Now that the cheap money is out there,everyone is going back to-do it like the Bundesbank said.Useless bunch of whiners.You just try to put down any policy out of the Eurozone even if that contradicts your past statements.Pathetic.
the German people are just sleepwalking into this total disaster, and trusting that their leaders know what they are doing. Has ANYBODY, ANYBODY AT ALL, in Germany (i no longer ask about the other countries, as most of them and their leaders are beneath contempt in their ignorance) asked whether Angela Merkel understands the first thing about Economics. Or are the German people simply making the assumption that because she is a Physicist, which is very mathematical, that she must also understand economics too.
And Bavaria for a long time post war lived of transfers from other German states. That is how federalism works."
Not forgetting that Germany in its entirety lived off huge debt right offs by the US and rest of Europe post 1945...
"The Germans are getting fed up of bailing everyone else out".
There is that view, but I think its partly because people don't clearly distinguish between contribution of Germany (which is based on its having the largest population and the largest economy) with the contribution of each individual German, which is a different matter (In the original figures it was, I think, quite a lot more than the average Slovakian but only slightly more than each French person and also slightly less than each Dutch person and quite a bit less than each Luxembourger)
Hah, SSDD...the protests will never stop and that is a Good Thing.
This isn't going to work if people start relaxing and think 'oh well, problem solved so now we can go back what we did before'; everybody needs to keep working at it - Greeks, Germans, Dutch, etc - even the English need to realise that they can't escape being involved. It is going to take years to sort out and no-one is going to be happy with it, but as long no-one gets too upset we'll get there. By which time there's likely to be something else new and exciting to worry about.
One of the things I like about modern Europe - instead of pulling on the jackboots and dusting off the Lee-Enfield, the locals muddle their way to a compromise. After a great deal of wailing and gnashing of teeth usually, and probably a mickey mouse sort of compromise at that, but a heck of a lot cheaper that the traditional European way of doing things
There are too many people (here and in Greece) who are having their heads firmly in the sand - and blaming others without taking responsibility for oneself and one's actions is ultimately a loser's attitude.
Fact is, this crisis is not primarily a European crisis, but first and foremost one of sovereign states who lived way beyond their means and wheedled themselves into the Eurozone by cooking the books in order to do so. It's obvious to anybody who isn't an instant-gratification-junkie that in the long run the money would have to be paid back, and that the wheels would come off in spectacular fashion in case the debt would amass to such astronomical proportions that it would be impossible to ever pay it back. Having a cavalier attitude towards debt doesn't change that! Well, the sh1t has hit the fan now....
....and I wish people (not just the Greeks!) would actually face up to it, as opposed to knock any suggestions for any solutions that are not on their national, ideological or europhobic street. Maybe there aren't any short cuts; maybe there aren't any simple solutions. The calls for default are getting increasingly desperate, and yet does anybody think about the possible consequences? Particularly for the people on the ground?
An uncontrolled default would in all likelihood mean a run on the banks, the collapse of the banking system, followed by the total collapse of commerce and any economical exchange as we know it. Austerity would be a doddle compared with this. The army would have to be brought in, there would be martial law, and if the situation would get even further out of hand, the outer fringes of Left and Right would turn against each other in some kind of civil war scenario. Etc, etc....
I wish people would start switching their brains on and start thinking about the possible consequences, before blaming everybody but themselves, and demanding all kinds of 'solutions' that would potentially make matters much, much worse for those who would have to suffer the consequences. Because don't kid yourselves - the situation could escalate still into something much, much worse!
ATHENS—The Greek government braced for further anti-austerity protests Wednesday while the country's parliament was debating legal changes that would clear the way for a massive debt restructuring to keep Greece from defaulting on its loans next month.
The legislation, which is to be put to the vote on Thursday, retrofits outstanding Greek bonds with so-called collective-action clauses, aimed at forcing losses on bond holders who may resist a voluntary debt restructuring that will see private-sector creditors who own some €200 billion ($264.7 billion) of Greek bonds take a 53.5% haircut.
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Greek Finance Minister Evangelos Venizelos speaks during a press conference in Athens on Tuesday.
.The Greek government is aiming for minimum participation of at least two-thirds of bond holders in a planned debt exchange, a finance ministry official said Tuesday, with a formal offer on the exchange expected to come by the end of this week.
The debt write-down plan aims to erase some €107 billion from Greece's sovereign debt burden. It is part of a related €130 billion loan deal agreed to by euro-zone finance ministers in the early hours of Tuesday.
Fitch Ratings on Wednesday downgraded Greece's credit rating to C from triple-C after confirmation of the second bailout package that includes a debt exchange.
Fitch said the debt exchange that would involve imposing collective-action clauses in Greek bonds "will be distressed and de facto coercive on private holders of Greek bonds." Fitch said Greece's credit rating will be reappraised after the new bonds are introduced by the swap.
The new bonds Greece will issue under a proposed debt exchange will be governed by English—rather than Greek—law, the country's finance minister said Wednesday.
Speaking to parliament's finance committee, Evangelos Venizelos said the change in the legal framework was part and parcel of convincing the country's private-sector creditors to participate in a voluntary €100 billion debt write-off
European Sovereign Credit Ratings
A look at the long-term, foreign currency credit ratings assigned to European sovereign borrowers by the three major ratings agencies.
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.Timeline: Debt, Doubt and the Euro Zone
."The new bonds will fall under English law, because no one will participate in this procedure if they know it is under Greek law," Mr. Venizelos said.
Greece's international creditors insisted that the new bonds should be governed by English law, because in that case Greek lawmakers can't review the legal terms of the deal. If the bonds were governed by Greek law, it would be easier for the Greek legislature to pass a law that simply amends the bonds.
The right to sue in an English court offers investors a greater chance of holding out against any potential restructuring offer
The right to sue in an English court offers investors a greater chance of holding out against any potential restructuring offer.
In another step to help shore up Greece's public finances, the Greek government has signed an international agreement on cooperation in tax issues that will help it crack down on evasion, the Organization for Economic Cooperation and Development said Wednesday.
The OECD said that by joining the convention, Greece will find it easier to gain information on tax evaders from authorities in other countries.
"In particular, solutions are being explored to provide Greece with an adequate way to increase tax revenue, taking into account the vast amounts channeled to Switzerland by Greek nationals and the technical difficulty for the Greek tax administration to crack down on international tax evasion," the report said.
0913 GMT [Dow Jones] Morgan Stanley lowers its EUR/USD entry level to
1.3300 and will continue selling on rebounds. "Though a finalisation of
the Greek bailout and PSI deals has spurred near-term optimism, we warn
that implementation risks still loom high. Furthermore, harsh fiscal
austerity risks putting a number of European peripheral countries into a
deep recession, pressuring debt/GDP ratios higher." The euro also faces
downside risks to the upcoming 3-year LTRO next week, MS says. From
1.33, Morgan Stanley is targeting EUR/USD at 1.2390 with a 1.3460 stop.
The pair trades at 1.3292.
0913 GMT [Dow Jones] Morgan Stanley lowers its EUR/USD entry level to
1.3300 and will continue selling on rebounds. "Though a finalisation of
the Greek bailout and PSI deals has spurred near-term optimism, we warn
that implementation risks still loom high. Furthermore, harsh fiscal
austerity risks putting a number of European peripheral countries into a
deep recession, pressuring debt/GDP ratios higher." The euro also faces
downside risks to the upcoming 3-year LTRO next week, MS says. From
1.33, Morgan Stanley is targeting EUR/USD at 1.2390 with a 1.3460 stop.
The pair trades at 1.3292.
whAT AN IDIOT ...WHAT A STUPID INCOMPETENT... On the back of our story this morning, a journalist asks Mr Rehn if Spain will be given more time to cut its deficit. In November, the EC said it expected Spain to grow 0.7pc in 2012. This has been revised to a 1pc contraction. Mr Rehn says the EC forecast does not include Spain's latest belt-tightening measures, adding that any decision on Spain will only be taken when it has "full information".
Mr Rehn then praises Italy
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