Eurozone finance ministers raised the combined lending capacity of their two
bailout funds to €700bn from €500bn". But the actual hard cash sitting in the
combined funds and ready to be lent as needed is now zero or negative, and it
would only rise towards €80 billion over two years as the eurozone governments
handed over the "paid-in capital" for the ESM. So in practice their nominal
"combined lending capacity" could run up against one of several lower limits:
the willingness of recipients to accept their bonds instead of cash, which is
how the EFSF paid the "sweetener" and accrued interest to holders of Greek
government bonds or the willingness of global investors to buy their bonds in
sufficient volume and as quickly as the money would be needed, or the
willingness of eurozone governments to supply the rest of the capital to the ESM
when it was needed, or the ability of those governments to borrow that money
when the ESM called for it. It's only necessary to take a pessimistic view, not
a wildly unrealistic view, to question whether these plans are indeed
"absolutely credible": "So at some point in the near future there will be about
€40 billion of money sitting in the ESM and a bunch of promises from countries
failing to live up to existing debt obligations - and that is the big firewall?
The correlation between who is providing the guarantees and who will need them
cannot be ignored. This new €500 billion number doesn’t exist; it’s not just
meaningless, it’s non-existent if Italy or Spain needs money." That's unless it
can be assumed that if necessary the ECB would just print whatever money was
needed, and if that's the case then it would be simpler to say that rather than
faff around with ever more complicated financial engineering to erect a facade
and pretend that it's a "firewall".
Access Investments-Building Awareness - European Union-ROMANIA
Sunday, April 1, 2012
Well .... what is it ??? 5 or 7 ???
Eurozone finance ministers raised the combined lending capacity of their two
bailout funds to €700bn from €500bn". But the actual hard cash sitting in the
combined funds and ready to be lent as needed is now zero or negative, and it
would only rise towards €80 billion over two years as the eurozone governments
handed over the "paid-in capital" for the ESM. So in practice their nominal
"combined lending capacity" could run up against one of several lower limits:
the willingness of recipients to accept their bonds instead of cash, which is
how the EFSF paid the "sweetener" and accrued interest to holders of Greek
government bonds or the willingness of global investors to buy their bonds in
sufficient volume and as quickly as the money would be needed, or the
willingness of eurozone governments to supply the rest of the capital to the ESM
when it was needed, or the ability of those governments to borrow that money
when the ESM called for it. It's only necessary to take a pessimistic view, not
a wildly unrealistic view, to question whether these plans are indeed
"absolutely credible": "So at some point in the near future there will be about
€40 billion of money sitting in the ESM and a bunch of promises from countries
failing to live up to existing debt obligations - and that is the big firewall?
The correlation between who is providing the guarantees and who will need them
cannot be ignored. This new €500 billion number doesn’t exist; it’s not just
meaningless, it’s non-existent if Italy or Spain needs money." That's unless it
can be assumed that if necessary the ECB would just print whatever money was
needed, and if that's the case then it would be simpler to say that rather than
faff around with ever more complicated financial engineering to erect a facade
and pretend that it's a "firewall".
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The draft awaits approval from parliament, where the prime minister's party has an absolute majority. It is likely to be implemented by May, but not without a public uproar: the government faced a general strike over its labor reforms that drew an estimated 800,000 people to protests.
Spain has slipped back into the crisis's cross hairs just a few months after it appeared to have weathered the worst of Europe's travails. The price the country pays to borrow from the market has risen again as worries intensify that its economic woes are entrenched and that a return to growth is unlikely soon.
support of Sarkozy in the French election campaign. Merkel still has no plans to meet personally with Hollande, even though the Socialist candidate officially requested a meeting. SPIEGEL recently reported that Merkel and other conservative EU leaders had even jointly discussed boycotting Hollande during the campaign.
At the same time, officials in Berlin know very well that, despite all the differences, a rift with the Socialist candidate is not a good basis for a future working relationship. Besides, staff are already in place in the Chancellery who have close ties to France. Take, for example, Nikolaus Meyer-Landrut, who is responsible for European affairs in Merkel's office and who is one of the most important members of the chancellor's staff. Meyer-Landrut, who is married to a Frenchwoman, wrote his PhD on "France and German unity" and served as spokesman for former French President Valéry Giscard d'Estaing during his time as head of the EU's constitutional convention.
Members of Hollande's camp confirmed the contacts with Merkel's Chancellery. "There are no official connections," said Jean-Marc Ayrault, the leader of the Socialists in the French National Assembly and a close confidant of the presidential candidate. "There are only messages that are exchanged between advisers." But he considers the rapprochement to be an intelligent move. "If Hollande is elected by the people of France, then he will have a mandate. They know that in the Chancellery too, and it's certainly smarter to prepare for a change than to rule out such a possibility."
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