Smoke and mirrors - - Speeding up implementation of the permanent bailout funds, the European Stability Mechanism, to 2012"... The intra-euro zone ESM treaty, draft signed on July 11th here: http://consilium.europa.eu/med... is legally dependent upon the EU treaty change agreed by EU leaders on March 25th: http://eur-lex.europa.eu/LexUr...which now awaits ratification by all 27 member states "in accordance with their respective constitutional requirements" before it can come into force. That is the EU treaty change which Hague ruled would not be put to a referendum, in his statement laid before Parliament on October 13th. "In my opinion the European Council Decision of 25 March 2011 amending Article 136 TFEU with regard to a stability mechanism for Member States whose currency is the euro adopted under Article 48(6) TEU does not fall within section 4 of the Act and no referendum is required in the UK." Far from speeding up the Bill to approve that EU treaty change, Cameron should announce that pending further negotiations he will not be proceeding with its ratification ... About half an hour ago, the Financial Times reported that S&P is putting the 6 AAA-Eurozone counteries, i.e. France, Germany, Netherlands, Austria, Luxemburg and Finnland COLLECTIVELY on negative watch, meaning that there will be a 50pc chance of a downgrade in 90 days. S&P cited "political turmoil" in the midst of the eurocrisis as a main reason for their decision, knowing this move will lead to yet more recriminations of politicians against itself: http://www.ft.com/intl/cms/s/0/7cf2e0ae-1f63-11e1-9916-00144feabdc0.html#axzz1fgeFjZei .... So much for the new investor confidence in the new approach of the eurozone leaders towards a solution of the crisis.
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Tuesday, December 6, 2011
MerKozy "demand tough new eurozone treaty" - demand of whom ???...what a farce !!!
Smoke and mirrors - - Speeding up implementation of the permanent bailout funds, the European Stability Mechanism, to 2012"... The intra-euro zone ESM treaty, draft signed on July 11th here: http://consilium.europa.eu/med... is legally dependent upon the EU treaty change agreed by EU leaders on March 25th: http://eur-lex.europa.eu/LexUr...which now awaits ratification by all 27 member states "in accordance with their respective constitutional requirements" before it can come into force. That is the EU treaty change which Hague ruled would not be put to a referendum, in his statement laid before Parliament on October 13th. "In my opinion the European Council Decision of 25 March 2011 amending Article 136 TFEU with regard to a stability mechanism for Member States whose currency is the euro adopted under Article 48(6) TEU does not fall within section 4 of the Act and no referendum is required in the UK." Far from speeding up the Bill to approve that EU treaty change, Cameron should announce that pending further negotiations he will not be proceeding with its ratification ... About half an hour ago, the Financial Times reported that S&P is putting the 6 AAA-Eurozone counteries, i.e. France, Germany, Netherlands, Austria, Luxemburg and Finnland COLLECTIVELY on negative watch, meaning that there will be a 50pc chance of a downgrade in 90 days. S&P cited "political turmoil" in the midst of the eurocrisis as a main reason for their decision, knowing this move will lead to yet more recriminations of politicians against itself: http://www.ft.com/intl/cms/s/0/7cf2e0ae-1f63-11e1-9916-00144feabdc0.html#axzz1fgeFjZei .... So much for the new investor confidence in the new approach of the eurozone leaders towards a solution of the crisis.
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In an unexpected move, Berlin and Paris also called for the eurozone permanent bailout fund, the European stability mechanism, to be launched next year rather than in 2013 as previously planned. The Franco-German package is to be turned into a formal joint proposal to be handed to Herman Van Rompuy of Belgium, who is chairing the EU summit on Thursday and Friday. It falls to him to twist arms, and to get the rest of the EU and eurozone to support the package.
A big sticking point will be Merkel's insistence on renegotiating the Lisbon treaty. Many member states fear this will mean opening a can of worms, sparking a lengthy, acrimonious bout of horsetrading. The Irish government will be particularly anxious since it may have to stage a referendum on the revised treaty, potentially derailing the entire scheme. Merkel and Sarkozy said they could bypass that problem by leaving the Lisbon treaty intact and cutting a separate deal among the 17 eurozone countries.
Merkel admitted that attempts by European leaders to resolve the crisis had fallen short and made a very bad situation a lot worse. "The belief that we can be taken at our word has suffered," she said. "That is why at the summit we need to regain some of this confidence and trust in our word. We want structural changes which go beyond agreements."
The Eurozone countries will not agree a fiscal 'deal' in a million years. Which country will be the first to agree to have it's fiscal arrangements scrutinised and possibly rejected by Brussels.
It's a pipe dream
This is all a game: just a scare story designed to put more urgency into the sheep so that they run into the pen, away from the Wolf.
But take a closer look at the shepherd and her sheepdog...
24 hours to save the NHS, 10 days to save the Euro, a year to save the world etc etc.
Commerzbank is already 25pc owned by the German taxpayer, but the fear is the new capital shortfall could push it close to full nationalisation.
The offer is priced at a small premium to the current market price of the debt and analysts expect the bank to easily find enough demand to complete the tender offer.
This will be in marked contrast to similar offers in recent weeks. Spanish lender Santander and French bank BNP Paribas upset some fixed-income investors when they launched their own deals to replace subordinated debt.
At the time, one fund manager described the deals as an effective “default”.
On Monday, Commerzbank said it would buy back €600m (£515m) of so-called "hybrid equity instruments" at a discount to their face value in a move that will help bolster the bank's Core Tier 1 capital.
Analysts at CreditSights said the bank could generate a capital gain of about €600m from the deal as it is buying the debt back at about half its face value.
Leaks ahead of the imminent release of new stress tests conducted by the European Banking Authority (EBA) suggest Commerzbank’s capital shortfall may now stand at €5bn compared with an initial estimate of €2.3bn as a result of new write-downs in the value of the bank’s holdings of peripheral eurozone sovereign debt.
Andrea Enria, chairman of the EBA, warned last night that forcing banks to cut shrink their balance sheets and build up capital could aggravate problems in the financial system.
Mr Enria, added that national governments moves to provide banks with more state-backed funding could also serve to strengthen the link between the region’s sovereign debt crisis and the banking crisis
David Cameron is planning to face down Tory Eurosceptics and stop short of demanding the repatriation of social and employment laws at Thursday's EU summit, which is designed to prevent the collapse of the eurozone.
As Nicolas Sarkozy and Angela Merkel called on all 27 EU leaders to agree to a revision of the Lisbon treaty in order to enforce tough new fiscal rules in the eurozone, the prime minister indicated that his main aim would be to protect the City of London.
Cameron is facing intense pressure from Eurosceptic Tories to use the EU summit to repatriate powers from Brussels.
Iain Duncan Smith, the work and pensions secretary, even suggested on Sunday that Britain should hold a referendum if EU leaders agree to "major treaty change". Under the European Union Act, passed into law in July, a referendum will be held only if significant UK powers are transferred to the EU.
One ally of Duncan Smith made clear that Eurosceptics are determined to use the negotiations this week to rebalance Britain's relationship with the EU. "We do not accept the prime minister's argument that the changes will only affect the eurozone. Of course the changes will have an impact on Britain.
There was the French tricolour red, white and blue to the right and the German black, red and yellow tricolour to its left. If you looked carefully at the artful arrangement, you could just spot the European Union flag behind, with only two of its stars showing.
This was the backdrop for the long-awaited union of Europe's most unlikely couple. Sarkozy and Merkel tiptoed around each other, talking of "amitié" and "entente" and "alliance" and "a dynamic, living relationship".
But the French president just came right out with it: there had been "70 years of bloody conflict, followed by 70 years of peace", he said. Germany and France "had to understand each other".
What, asked one journalist, did Frau Merkel think of the outbreak of Germanophobia in France that has seen her likened to Germany's first chancellor, Otto von Bismarck, who humiliated France in the Franco-Prussian war in 1870?
The insults, which have come mostly from the political left in France, included that Germany was "drunk with power" and suffered a "mental rigidity".
"I have read much of what the press has written about Germany," she said. "What people should know is that we are working together to find common solutions ... We will never confront each other as we did before".
But the war genie was out of the bottle and he could not put it back.
"What happened before, must never happen again," he said, this time referring to the Greek debt crisis.
Concluding that Europe, that is France and Germany, had to act quickly he spoke of a "forced march to reestablish confidence in the eurozone and the euro". Merkel stood, stock still, gripping the lectern and nodding.
The meeting at the Elysée Palace followed weeks of what Sarkozy had called – again perhaps a little insensitively in the circumstances – "collaboration".
As she emerged for the lunchtime summit from her limousine, the pair pecked cheeks – the French call this "bises" (little kisses) – shook hands vigorously, posed for the cameras, shook hands vigorously again and disappeared inside.
Could we know what they would be eating over their working lunch? "No. NOT AT ALL", barked a woman from the presidential staff. Nearly two hours later – it was a French lunch after all – everyone was still waiting for the happy couple to make an appearance.
The austerity measures breakdown into €12-13bn of cuts (in addition to pensions, the guillotine mainly fell on local authorities) and €17-18bn of tax increases.
Ahead of the announcement, there had been a lot of speculation in the Italian media that the government was set to increase income tax for those earning more than €75,000 a year. This did not happen. Instead, the government focused its tax increases mainly on property and assets – reintroducing taxes on first homes and raising existing levies, increasing the levy on second homes by up to 75% and increasing taxes on yachts, private jets and luxury cars. Throughout, Monti was adamant in stressing the fairness of his measures – a point he underlined by saying that he won't be taking a salary as prime minister. In addition to taxes on luxuries, the government also introduced a levy on bonds and shares held by investors and a 1.5% tax on capital bought into Italy last year from abroad (this may explain German Bundesbank estimates that €80bn of capital was taken out of Italy in August and September).
Cuts and taxes are one thing, yet I saw little within Monti's plan setting out measures to boost growth and carry out structural reform. More worryingly, the tone and nature of measures was reminiscent of announcements in Athens, Dublin and Lisbon. Across Europe there seems to a monotonous lack of inventiveness. If, and when, Monti starts to introduce more radical change, the political volume is bound to get louder and vested interests more resistant. The government will then have to choose whether to implement the reforms that the country desperately needs. I believe that decision will, one way or the other, shape Mario Monti's legacy.
Fifteen out of 17 eurozone nations – including Germany – were threatened with downgrades to their credit ratings in a move that may imperil the foundations of a landmark rescue deal agreed on Monday.
Standard & Poor’s (S&P) last night put all members of the single currency – barring Cyprus and Greece – on “credit-watch negative” because of a rise in the “systematic stresses” in the eurozone in recent weeks.
The countries under review include the six eurozone members with a AAA-rating, France, Germany, Austria, Finland, Luxembourg and the Netherlands.
S&P highlighted five reasons for the move, including tighter credit conditions, a greater risk of eurozone recession, as well as the "continuing disagreements among European policy makers on how to tackle the immediate market confidence crisis".
The euro crisis is alive and well for Angela Merkel and Nicolas Sarkozy. To solve it, the 17-member states need to merge under a single set of fiscal rules to mirror the single set of monetary and currency rules they abide by. Anything less and the markets will win (having already overthrown two elected governments). Succeed and a United States of Europe emerges.
Having failed the market's test, until now, the eurozone's two most important leaders offered proposals they think will calm investors and reopen credit markets. Yields certainly fell in the most toxic countries. But now comes the biggest challenge – convincing the people.
Political solutions to the eurozone crisis, including this one, have lacked democratic legitimacy. There are presidential and legislative votes in France to come before this latest treaty is ratified, which will be key. But other countries may also want to vote, quite apart from the British. The loss of sovereignty implied in the new treaty needs testing and, until the eurozone votes for it, the markets will always question its legitimacy.
With its talk of golden rules, automatic sanctions and budgets moving towards "equilibrium" it has all the flawed hallmarks of the previous stability and growth pact, liberally flouted by member states.
A combination of markets and plebiscites could yet derail the Sarkozy-Merkel plan, resulting in yet more crisis and confusion
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