Open Europe’s Raoul Ruparel is quoted in the WSJ and Columbia Journalism Review saying, “I can't imagine [the ECB is] going to be willing to put up the amounts of the money the markets would want to prop up Italy and Spain, it would have to be hundreds of billions of euros.” Handelsblatt reports that the ECB’s move received widespread criticism in Berlin, including from MPs from both the CDU and FDP. The paper also quotes several unnamed former Bundesbank Presidents arguing that the decision breaches the Maastricht Treaty. Meanwhile, eurozone officials disagreed publicly yesterday over whether the lending capacity of the EFSF, the eurozone’s bailout fund, could be increased – a move which is seen as necessary for the fund to act as a backstop for Italy and Spain. French Finance Minister François Baroin said, in an interview with Europe 1 radio, "The allotment [for the EFSF] is €440bn and we've already said if we need to go further we will go further". However, a spokesman for Chancellor Angela Merkel, Christoph Steegmans, suggested, “The EFSF will remain what it is.” Les Echos reports that, in a letter to the lower house of the Dutch parliament, Dutch Finance Minister Jan Kees de Jager has warned that a “significant” increase of the size of the EFSF could have “consequences for the solvency of the member states that guarantee it,” including the Netherlands, adding that the increase “cannot be considered as a panacea.” Finnish Prime Minister Jyrki Katainen and Slovakian Finance Minister Ivan Miklos also voiced opposition to an increased EFSF over the weekend. Open Europe’s Pieter Cleppe appeared on Austrian TV ORF and RT saying, “If politicians in triple-A countries are not willing to put up the huge sums of money on the table to keep the eurozone together, they should be brave and start preparing alternatives”. Open Europe is also cited by The Parliament, Der Standard, Dutch business daily Het Financieele Dagblad and Romanian business daily Ziarul Financiar, warning against some aspects of the ECB’s bond-buying programme. Open Europe’s Mats Persson appeared on RTE’s Drivetime programme yesterday discussing the eurozone crisis. Reuters reports that investor fears have turned to France, with the cost of insuring against a French default reaching record highs yesterday. Meanwhile, Greece’s market regulator banned short selling for two months yesterday, citing extraordinary market conditions.Open Europe blog FT WSJ EurActiv Times Guardian BBC EUobserver Independent Irish Times Irish Times 2 Irish Times 3 Irish Independent Jornal de Negocios Jornal de Negocios 2 Expresso Bloomberg IHT IHT 2 FT 2 WSJ 2 FT 3 European Voice CityAM Le FigaroReuters Le Figaro 2 Telegraph Telegraph 2 Les Echos FT 4 WSJ 3 Reuters 2 Irish Times 4 WSJ 4 Reuters 3 FT 5 EurActiv 2 CityAM 2WSJ 5 Independent 2 Reuters Italia RT Handelsblatt Yle Handelsblatt 2 The Parliament Columbia Journalism Review ZF
Meanwhile, writing in the FT, former ECB board member Otmar Issing argues, “A monetary union with a stable euro can only survive if central bank independence is fully respected. This implies that the European Central Bank abstains from fiscal policy actions. Yet to change the ‘no bailout’ clause ever more in the direction of a bail-out regime is not a step towards a democratically-legitimised political union. It is a move on a slippery road to a regime of fiscal indiscipline drowning hitherto solid countries in the morass of over-indebtedness.” In Il Sole 24 Ore, Alessandro Merli argues, “the fundamental question is whether the ECB interventions [on the bond markets] are only a precursor to the EFSF’s ones or – in light of Germany’s opposition to increase the size of the latter – they will end to become a permanent function. At that point, says HSBC Chief Economist Stephen King, the ECB will increasingly resemble to the [US] Federal Reserve in 2008-2009, with a massive expansion of its balance (and its risks). The alternative could be the collapse of the euro or a serious economic depression across Europe.” In an interview with Italian daily Il Corriere della Sera, Kurt Lauk, who chairs the Economic Council of German Chancellor Angela Merkel’s CDU party, notes that “the purchase of bonds by the ECB will have consequences for Germany. At some point, the ECB will be forced to devalue the bonds it holds in its portfolio; inevitably, it will then need a capital injection, which has to be provided by the other central banks in the eurozone. And this in turn will end to erode the profits of the Bundesbank, putting its balance at risk.”Meanwhile, a WSJ editorial argues, “If EU leaders aren't careful, the question may soon become whether they can do anything to prevent other countries from following Greece down the road to default and restructuring.” Telegraph: Redwood Conservative Home: Glendening Independent: Lawson La Stampa: Rusconi La Stampa: Mattioli Corriere della Sera: Venturini Il Sole 24 Ore: Bufacchi Il Sole 24 Ore: Merli Le Figaro: de Kerdrel Le Figaro: Steve and Jean-Jacques Ohana WSJ: Russell Mead FT: Editorial FT: Issing CityAM: Crow WSJ: Editorial WSJ: Real Time BrusselsWSJ: Real Time Brussels blog 2 WSJ: Heard on the Street BBC: Hewitt Times: Leader Times: Sachs Times: King Guardian: Pratley WSJ: Hannon Telegraph: Editorial Corriere della Sera: Lauk
The EU is to allow exports of diamonds from Zimbabwe's Marange diamond fields despite new allegations of torture camps run by President Robert Mugabe's security forces in the mining region, reports the Telegraph.
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Thursday, 11 August 2011
ECB bond buying decreases Italian and Spanish borrowing costs but stock markets continue to fall across Europe;
France and Germany disagree over increase in size of eurozone bailout fund
Stock markets fell globally yesterday following the downgrade of the US credit rating and the continuing fears over the eurozone crisis, despite the ECB’s decision to purchase Italian and Spanish debt. The ECB’s decision continues to bring down the Italian and Spanish cost of borrowing, with both continuing to decline this morning amid speculation that they could continue purchases for some time, according toBloomberg. The WSJ reports that estimates of the level purchased yesterday range between €3.5bn and €5bn. However, it is not clear yet whether investors are responding to the promise of ECB purchases or the actual purchases themselves.
John Redwood: “Let’s give up our EU veto and opt out instead”;
Otmar Issing: A bailout regime is a “move on a slippery road to a regime of fiscal indiscipline”
Writing in the Telegraph, Conservative MP John Redwood suggests that the UK should “surrender its right to veto what the other EU states want to do – whatever it may be and however much power it may take from member states – in return for the right to opt out of anything they do which does not suit us.” A comment piece in the Independent carries the headline, “If the euro goes under, we should leave the EU.”
Writing in the Guardian, environmentalist George Monbiot argues, “Almost everywhere fish stocks are collapsing through catastrophic mismanagement. But no one in the rich world has managed them as badly as the EU.” He compares the EU telling Iceland and the Faroes that they should engage in ‘responsible modern fisheries management’ to being “lectured by Attila the Hun on human rights.”
The Express reports that a recent YouGov poll compiled for the Campaign for a Referendum shows that 52% of UK voters want to leave the EU, while only 30% say they want to remain in it.
The FT reports that Chancellor George Osborne will use the eurozone crisis as a political “opportunity” to inject urgency into his attempts to return the UK economy to growth.
Who can live inside Issing’s monetary union?
Compare and contrast France’s and Germany’s positions on the increase of the eurozone bailout fund
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