The Irish government has suddenly complicated the picture by requesting debt relief from as a reward for upholding the integrity of the EU financial system after the Lehman crisis, though there is no explicit linkage between the two issues. "We carried an undue burden for protecting the European banking system from contagion," said finance minister Michael Noonan. "We are looking at ways to reduce the debt. We would like to see our European colleagues address this in a positive manner. Wherever there is a reckless borrower, there is also a reckless lender," he said, alluding to German, French, British and Dutch banks. Mr Noonan hinted that Dublin is asking for some of interested relief on a €31bn EU promissory noted linked to the Anglo Irish fiasco, among other matters. Mr Noonan said Ireland's public mood has turned very sour. "We have indicated to Europe's authorities that it will be difficult to get the Irish public to pass a referendum on treaty change," he said. The EU's new fiscal rules would be legally binding and "justiciable" before the European Court, he said. This raises the likelihood that Ireland's top court would insist on a referendum. The Irish voted `No' to both the Nice and Lisbon Treaties, before being pressured into repeat ballots, and would certainly some form of quid pro quo in this case. The European commission president, José Manuel Barroso, has admitted that it will be impossible to save the euro unless eurozone countries agreed to strict central controls on their tax and spending policies. Barroso's warning, his starkest yet in the sovereign debt crisis, came as Germany suffered what analysts called a "disaster" as it managed to sell only two-thirds of its 10-year bonds (bunds) at auction. With markets already pricing in an imminent endgame for the single currency, France suffered further ignominy with a warning shot across its bows about its triple-A credit rating from US agency Fitch. The euro slid to its lowest level against the dollar for seven weeks. German government officials tried to play down the scale of the abortive bund auction, pointing to the lowest rate – 1.98% – ever recorded for such a long-term bond. But the Bundesbank was forced to retain almost €2.4bn of the planned €6bn sale "for another day" and analysts said the weak demand indicated that eurozone contagion was now afflicting Europe's strongest economy. The commission president, bristling with impatience, exasperation and anger, made his remarks on the euro's survival at a Brussels news conference where he launched a green paper on so-called stability bonds – common eurozone debt instruments for pooling sovereign risk.
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Wednesday, November 23, 2011
German government officials tried to play down the scale of the abortive bond auction
The Irish government has suddenly complicated the picture by requesting debt relief from as a reward for upholding the integrity of the EU financial system after the Lehman crisis, though there is no explicit linkage between the two issues. "We carried an undue burden for protecting the European banking system from contagion," said finance minister Michael Noonan. "We are looking at ways to reduce the debt. We would like to see our European colleagues address this in a positive manner. Wherever there is a reckless borrower, there is also a reckless lender," he said, alluding to German, French, British and Dutch banks. Mr Noonan hinted that Dublin is asking for some of interested relief on a €31bn EU promissory noted linked to the Anglo Irish fiasco, among other matters. Mr Noonan said Ireland's public mood has turned very sour. "We have indicated to Europe's authorities that it will be difficult to get the Irish public to pass a referendum on treaty change," he said. The EU's new fiscal rules would be legally binding and "justiciable" before the European Court, he said. This raises the likelihood that Ireland's top court would insist on a referendum. The Irish voted `No' to both the Nice and Lisbon Treaties, before being pressured into repeat ballots, and would certainly some form of quid pro quo in this case. The European commission president, José Manuel Barroso, has admitted that it will be impossible to save the euro unless eurozone countries agreed to strict central controls on their tax and spending policies. Barroso's warning, his starkest yet in the sovereign debt crisis, came as Germany suffered what analysts called a "disaster" as it managed to sell only two-thirds of its 10-year bonds (bunds) at auction. With markets already pricing in an imminent endgame for the single currency, France suffered further ignominy with a warning shot across its bows about its triple-A credit rating from US agency Fitch. The euro slid to its lowest level against the dollar for seven weeks. German government officials tried to play down the scale of the abortive bund auction, pointing to the lowest rate – 1.98% – ever recorded for such a long-term bond. But the Bundesbank was forced to retain almost €2.4bn of the planned €6bn sale "for another day" and analysts said the weak demand indicated that eurozone contagion was now afflicting Europe's strongest economy. The commission president, bristling with impatience, exasperation and anger, made his remarks on the euro's survival at a Brussels news conference where he launched a green paper on so-called stability bonds – common eurozone debt instruments for pooling sovereign risk.
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The critical question is if this can happen to Germany, what hope have other Euro-zone countries?
The corollary is, was this collusion by the markets, Wall Street and the City, to once and for all crush the Euro?
Markets are now turning sour on Germany because of the increasingly fast-paced dumping of eurozone exposure in general by financial investors. Contagion has made all aspects of the system toxic.
That's exacerbated emerging fears over Germany's role as the ultimate lender of last resort to the eurozone. It has always been assumed that Germany would get its cheque book out. But that in turn assumed it would be able to generate support in the bond markets itself.
Even before the meeting in Strasbourg has begun, France has declared that the European Central bank must urgently intervene before the crisis becomes even more severe.
French foreign minister Alain Juppe told France Inter radio that the question of the ECB's role will dominate the agenda
This is one of the key divisions between Germany and France. Berlin insisting that Europe's Central Bank must stick to its remit of price stability (controlling inflation). Paris, though, believes the crisis is so serious that the ECB must play a wider role than just mopping up the debt of Italy and Spain.
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