Eurozone Debt Crisis

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I was listening to Lucinda Creighton, the minister of state for European Affairs, on the radio this evening. She said things will "will settle down in the next few weeks" referring to the never ending disaster that is the Eurozone in it's present form.

It strikes me that this wishful thinking is rife throughout the bloc. It is part of the reason why we are stumbling from one crisis to the next. Yesterday was Greece, today Italy, tomorrow Spain and round and round we go.

But what really has annoyed me is the sense of indecision and farce that was the G20 meeting that ended in complete disarray. Sarkozy lost his cool, Merkel left early in a huff and that fucking ejjit Berlusconi had more important things on his mind then the small irritant of his country's financial crisis.





This is the state of play with national bonds in the Eurozone today




Italy, Spain, Belgium, France in that order seem to be next up. And there is no bailout fund big enough to accommodate Italy. The Chinese were asked at the G20 to help leverage the EFSF. They thought about it and politely told Merkozy - "erm, no" so did everyone else. (one presumes they took one look at Berlusconi and thought these guys can't be serious?)

The longer it goes on the more people are going to think we have to get out of this freak show no matter what!

It's put a floor under our progress the longer it goes on with the bond markets (on the 10 year bond at least)...the shorter span bonds are still being reigned in thankfully.



What do you think of what is happening in Euroland? And what do you think the consequences will be both for Ireland and the Eurozone as a whole in the end?

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France and Germany plan treaty changes





French President Nicolas Sarkozy says France and Germany are to propose EU treaty changes.


Euro zone giants Germany and France vowed to propose changes to EU governing treaties today, but Chancellor Angela Merkel stood by her refusal to widen the European Central Bank's role.

France had urged Berlin to allow the ECB to become a lender of last resort, with the firepower to protect debt-ridden eurozone members from falling victim to the bond markets, but the German leader stood firm at crisis talks.

President Nicolas Sarkozy of France and Prime Minister Mario Monti of Italy stood by her side at a news conference in Strasbourg as she repeated her line, which observers and traders have warned could threaten euro zone survival.

"The French president has just underlined that the European Central Bank is independent," Merkel told reporters in the eastern French city. "So the eventual modifications to the treaties will not concern the duties of the ECB, which concern monetary policy and monetary stability," she added.
Sarkozy agreed that: "All three of us said that with respect for the independence of this institution, one should refrain from positive or negative demands of the ECB."

The yield on Italian 10-year bonds, the broad cost of government borrowing, soared back above 7% today after the French, German and Italian leaders agreed not to widen the role of the European Central Bank to support weaker euro zone states. The yield stood at 7.11% this evening.

Earlier, however, Sarkozy's senior ministers had made it clear that Paris was pushing for a change in the ECB's role, which Berlin insists must remain limited to controlling inflation and not bailing-out insolvent states.

"It is urgent," Foreign Minister Alain Juppe said. "The situation is serious. We must not underestimate its gravity."

Germany, while holding out firmly against such an expansion of the ECB's role, is calling for changes to European treaties to enforce greater budget discipline on its heavily indebted partners.

Sarkozy said that he and Merkel would work on a package of reforms in coming days, and present it to the Union as a whole at a December 9 summit. Some EU allies warn that treaty changes will take too long and might prove politically impossible to enact if hard-pressed voters suffering austerity programmes or eurosceptic governments like Britain's reject them.

Italian Prime Minister Monti also came under scrutiny in Strasbourg, with euro zone countries anxious to ensure he implements promised reforms to shore up the Italian economy and halt the spread of the crisis. He reaffirmed his promise to balance the Italian budget by 2013, and both Merkel and Sarkozy said they supported him.

France has been scrambling to retain its top AAA credit rating, which is also vital to the EU debt rescue fund called the EFSF. Merkel is firmly opposed to freeing the ECB up to monetise euro zone debt, fearing this would undermine its limited inflation-busting mandate, and observers say it would take a catastrophe to change her mind.

But Germany's own position was exposed as weaker than thought by its failure yesterday to find takers for €2 billion worth of 10-year bonds, a rebuff from the markets to Europe's strongest economy.

German bonds are the gold standard of euro zone debt but Berlin managed to draw bids of only €3.9 billion for a €6 billion auction, indicating investors are now sceptical about even the safest European assets.

Analysts have said that only a sharply deeper crisis - such as a situation in which Spain and Italy could no longer refinance their debt through private bond markets - could conceivably change Berlin's mind.

Sensing an opening for deeper European integration, the European Union has begun to push for sweeping new powers to override national budgets and issue joint euro zone bonds to pool member state debts and share risk.

http://www.rte.ie/news/2011/1124/euro-business.html

Italy says they can borrow at 8%....the market says "ok" and their back over 7%.

Please welcome Belgium to the club of delinquents. Their 10 year bond yield hit 5.7% today.