Informal Summit coming up Wednesday and did the EU just threaten Germany against definitively turning down eurobonds as they are just a matter of timing ? Oh really ? ? Meanwhile , Hollande plans for the Eurozone to issue common eurobonds and to embrace a financial transaction tax are non starters. Similarly , the plan to promote growth has been frowned upon by Austria and Germany if that means dumping the austerity programs , increasing spending or more debt. So , get ready for another meaningless statement and the focus shift to the next Summit of June 10th ( Merkel / hollande / Rajoy and Monti )

http://www.businessweek.com/news/2012-05-22/oettinger-warns-against-excluding-euro-bonds-handelsblatt-says

European Union Energy Commissioner Guenther Oettinger warned the German government against “definitely” excluding euro bonds, Handelsblatt reported, citing an interview.

Euro bonds are “a matter of timing,” the German newspaper quoted Oettinger as saying. The EU Commissioner welcomed the European Parliament’s request for a euro debt amortization fund, Handelsblatt said. The fund should be financed with euro bonds, Handelsblatt cited Oettinger as saying.

and...

http://aviagemdosargonautas.blogs.sapo.pt/

Eurointelligence Daily Briefing, May 22, 2012

Oh no, this is What They mean by a Eurobond? Here it comes, the Eurobond, the € 230m project bond instrument (yes that is millions, not billions); European ambassadors have Agreed on a pilot project, but Germany wants to make sure That this sets the precedent; the idea is to use funds for Those cross-border infrastructure projects; Herman van Rompuy has written a letter to EU leaders urging Them to approach tomorrow's informal discussions with an open mind; Also Italy and France are pushing for a timetable on eurobonds; Wolfgang Schäuble and Pierre Moscovici, France 's new finance minister, openly disagree on eurobonds at the first meeting; IIF says Spanish bank losses are higher than Official Estimates suggest; Mariano Rajoy says he could solve the eurozone crisis in 24 hours by focusing on financial regulation; says Eurobonds will not help much; New Democracy and the liberal Democratic Alliance to form an electoral pact in the hope to Ensure Become the largest party at the forthcoming Greek elections; Alexis Tsipras the styles himself the frontman against capitalism; Irish television yesterday staged a heated debate Between Proponents and Opponents of the tax pact; the biggest issue in the debate Focused on further Top ESM access to funding in case of a No vote; Angela Merkel has invited leaders of Other German political parties to discuss the fiscal pact; Spiegel and S üddeutsche Zeitung carry large articles on Merkel 's political isolation in Europe and Germany; Nikolaus Blome says Francois Hollande is a troublemaker; J org Asmussen Proposes a wide-ranging banking supervisory union with a single system for large, cross-border bank ; Should Mario Blejer says Greece not follow the example of Argentina; Paul Krugman challenges Wolfgang M ü nchau the Extent That's assertion of the eurozone imbalances are exaggerated; Thomas Mayer, meanwhile, is Proposing a "geuro" to save us from "grexit." Comment Eurointeligence and Analysis Building a political Euro area by Diego Valiante The Gap Between Democratic representation and political decision-making in Europe is widening. Not only the economy, but Also the institutional setup in Europe needs to change. Peter Spiegel  of the FT has the details of the discussions about where eurobonds - at ambassadorial level - are currently headed. It turns Oct. That They Do not mean a Eurobond When They talk about the Eurobond. They mean the bond project. It will start with a "trial" of € 230m, and yes that is million, the sum of the macroeconomic significance. (Even in Belgium it would be in a number of macroeconomic Significance). The idea is to allocate Those funds to finance cross-border transport, communications and energy infrastructure. And with this miniature scheme, Germany, the Netherlands, and Finland are still not happy.Spiegel quotes a senior diplomat saying That the division was about the actual Whether this pilot scheme Could be made ​​permanent. The Germans request Guarantees That this would be a one-off measure only. (So ​​much for the Eurobond. And so much That is dinner tomorrow night. It looks like One Of Those overhyped and useless meetings where everybody will hype the new growth agenda. But When You Look behind the headlines, you will discover That we are Quickly Were we back to where before, that 'there is the strategy to solve the crisis.) Reuters quotes an unnamed U.S. official saying the the Eurobonds That will not happen overnight, "but there is a desire for a plan of action Toward euro bonds."The official said Hollande would have support from other leaders. Reuters reports Robert Fico of Slovakia That Already Indicated his support for the French position. Herman van Rompuy has written a letter to EU leaders urging Them to approach the discussion with an open mind. Schäuble and state Moscovici Their difference of opinion In Their first meeting Wolfgang Schäuble and France's new finance minister Pierre Moscovici Stated Their difference of opinion on the topic of Eurobonds, Les Echos  reports. "We have spoken about it," Moscovici said yesterday after his first meeting with Schaeuble in Berlin. "Each one of us Confirmed Already that is his position known." However Moscovici reconfirmed France's commitment to bring the deficit down to 3.0% by 2013. The EU Commission and the IMF's However not think this is Possible and That estimate without further Top drastic consolidation Measures the deficit will be 4.2% (Commission) or 3.9% (IMF).According to a different story in  Les Echos  Francois Hollande is thinking about Proposing a change in the way the deficit is Calculated and to take into account only the Structural Deficit. IIF says Spanish bank losses are much higher than official figures suggest This is from the  Wall Street Journal Real Time Economics  blog. Could Spanish bank losses range from € 218bn to € 260bn, According to the Institute of International Finance, Which as a result of the Spanish government would need to step in at lots of cajas Beyond Bankia. IIF to cover Estimates That These losses would require new capital of around € 50bn to € 60bn. The IIF excellant calculations based on loan loss rates for Projecting onto Ireland Spain. Also it said the number of limiting factors suggest That Could eat the losses in at the upper end of the range because of the Deteriorating economy. Also, house prices have to fall further Top. El Pais  has the details on the decision-Spanish government to hire two consultants and three external auditors to look at the hidden losses of the Spanish banking system. Rajoy Thinks Can he solve the crisis in 24 hours Either he has found the magic ingredient or he does not know what he is talking about (in prizing for guessing Which of the two we think is more probable.) Mariano Rajoy made ​​yesterday One Of Those hair-risingly confident statements, where you wonder what he HAD in mind. Reuters quotes the saying hin That Eurobonds are not going to solve the crisis As They are too long-term (he is right on that, Especially the Eurobond scheme that is Currently under discussion). But then you eat this: "(Financial Stability) Can Be Achieved Quickly, does not need long discussions or debates or studies or regulation, Which is going to take two or three years to take effect. This is a decision-Which Can take effect Within 24 hours, "he said.  New Democracy strengthened through new alliances The leader of conservative New Democracy, Antonis Samaras, and the head of the liberal Democratic Alliance, Dora Bakoyannis, the former conservative minister and political rival, on Monday Announced That They Were joining forces in "a patriotic, pro-European front" Aimed at "battling the forces of populism" and Ensuring That the country remains in the Eurozone,  Kathimerini  reports. The key axis of the agreement was That members of Democratic Alliance run on ND's ticket to secure the 50-seat bonus in Parliament Given to the party That Comes first in the polls. Two former MPs, Plevris Thanos and Giorgos Anatolakis, moved to ND's camp. Three more ex-LAOS Deputies Were expected to jump ship today. Tsirpas stylizes himself the 'European' frontman capitalism against Here is what Alexis said Tsirpas During his press conference in Paris after meeting with the leader of France's Left Front, Jean-Luc Mélenchon: "In Greece, we are fighting on behalf of Germans, French and all European people .... Financial capital, bankers and capitalists have joined forces in the European union against Greeks. They want to destroy Greece So They Can attack Europe. "About the EU-IMF bailout Programme he said:" "The memorandum can not be negotiated because hell can not be negotiated" (as quoted by  Kathimerini , more quotes on  Guardian ). Heated debate Between Opponents and supporters ahead of Irish referendum In Ireland, Supporters and Opponents of the tax treaty clashed sharply in the course of the televised debate last night on RTÉ, According to the  Irish Times .There Were Several heated Exchanges Between the speakers from each side on whether or not Ireland Could access the ESM in the event of a No vote. The Yes camp argued the ESM That would be the only source of funding available to Ireland in the event of a second bailout, and That Was only available if the referendum was passed. The No camp argued the ESM would still be available to Ireland and That there was room to negotiate. Also the growth prospect of the chapter was interpreted Differently. The supporters argued That the treaty would not be changed but That the French might succeed in Achieving the protocol while the Opponents expect That the final shape of the treaty might not be known Until the summit of EU leaders in June. Merkel invites political parties for talks about the tax pact Angela Merkel invited the Coalition and Opposition parties for talks about the fiscal pact is Thursday, the day after the special summits in Brussels where Merkel and her colleagues will discuss the growth Enhancing Measures and Eurobonds, Frankfurter Allgemeine Zeitung reports. The pact is up for a vote by the end of May. Since it requires a two-Thirds Majority-The Opposition's votes are crucial. But so far the social democrats and greens have only asked for more growth without Enhancing Measures Clearly stating how They intend to vote. Der Spiegel and Süddeutsche Zeitung Say That Merkel is isolated Der Spiegel  and  Süddeutsche Zeitung Both  stories run long how Angela Merkel has Become isolated in Europe after Francois Hollande's election and how much the chancellor is under pressure after the defeat of her party in North-Rhine-Westphalia. In an article with the headline "Merkel Loses her triple A" Der Spiegel writes. "In the long run she will not be Able to keep up her tough stance Towards her European partners with Regard to consolidation. The pressure That Hollande and others are mounting against her is just too big. "On Top Of That the news magazine writes That Merkel is getting under Increasing pressure domestically because of the CDU's Historically bad results at the state elections in North-Rhine-Westphalia, Germany's most populous states. Süddeutsche Zeitung has a similar view. "Merkel is provoking ever more consolidation Opposition to her policy and her recipes for debt reduction", the paper writes."Ahead of the summit there is the doubt That the whole world expects Germany to do more." Nikolaus Blome Thinks Hollande is Europe's troublemaker In a comment for the mass market daily Bild the paper's  deputy editor Nikolaus Blome  regrets Nicolas Sarkozy's departure from the European scene. "That Sarkozy Recognized with the French-German tandem Merkel was sitting in the front - holding the steering wheel," he tells the paper's daily readers 10m. "The new French president does not want state to Recognize this. He is pumping himself up, he is blocking the road. "Blome Refers to Hollande's announcement to withdraw troops from Afghanistan and Quickly Stimulate growth with debt in the middle of the euro crisis. "Merkozy is the past. Merkollande does not exist, "he states. Blome says Merkel and Hollande That will have to find a common ground on the most pressing questions for Europe. Otherwise there will be only empty Compromises Which Will not hold for long. Asmussen pleads for eurozone fiscal and financial market union with excellant own budget In a speech yesterday pleaded for Jörg Asmussen Deepening the integration of the 17 euro members by Creating a tax and financial market union That would be underpinned with excellant own budget and stronger Democratic control, Financial Times Deutschland  reports. The German ECB board member wants to break the link Between banks and Their sovereigns through the ESM and by Creating a "special fund in the EU budget for the eurozone", Which Could Be financed by the financial transaction tax That most members want the euro to Introduce . Also Should there be a real financial market for the union with the eurozone banking supervisory and bank resolution authority with real competencies. In order to Enhance Democratic legitimacy, Asmussen U.S. Proposes to give the parliament the right of initiative, Which it does not have, and to set up a Subcommittee, Which would Regularly convene with members of the eurozone only. Mario Blejer Greece warns not to follow Argentina The man who was at the helm of Argentina's central bank at the excellant team of crisis is not advising Greece to follow in the footsteps of Argentina.  Mario Blejer writes in the FT That instead it would be smarter for Greece to seek three Concessions. First, the relaxation of austerity;  second, transfers to boost growth and competitiveness,  and third, further Top debt relief. Increase competitiveness Can transfers? He says this would be if the transfers Were Possible geared Towards the Reduction of production costs. This plus public Investments funded by the EIB, Should Improve competitiveness. Paul Krugman on the eurozone's internal imbalances In his blog,  Paul Krugman  Disputes Wolfgang Munchau's assertion in his FT column on Monday Which states That imbalances are an issues, but the Extent may be exaggerated. Here is what Krugman has to say: "That One is the divergence Between Spain and the euro area average is not the big Nearly the the divergence Between Spain and Germany. Fair enough - but the average euro includes Spain and Other GIPSIs, Which in total are about one third of the eurozone's GDP, so the Spain-EA difference understates the actual adjustment required. Second, Munchau's argument That Germany was badly overvalued in 1999. But it Roughly Had a balanced current account; I think it's hard to make the case That it was a really big overvaluation. Third, Munchau point That's correct current account imbalances have narrowed since Their peak on the eve of the crisis. As I read it, However, this Largely Reflects the depressed state of the peripheral economies rather than any large improvement in competitiveness. Finally, All These Measures of competitiveness are highly imperfect - Which They Are. If Other dates Were telling a different story, I'd be prepared to discount the figure above; but They are not. " Can the "geuro" save us from "grexit"? Here is another ugly phrase, invented by Thomas Mayer of Deutsche Bank, the "geuro", a parallel currency. See, for example,  Spiegel Online  for more. The idea of a parallel currency for Greece is Hardly new. A large number of Economists Have Been thinking about how It could be accomplished. The basic idea is That Greece Introduces a new financial instrument markets - an IOU - that is used in domestic transactions and That will soon float against the euro, against Which it will devalue. Domestic prices and wages will be dominated in That New currency. At the end of the process the IOU will be abolished at then prevailing market rates. (The parallel currency is Essentially a way to Reduce wages and prices. But why would the Greek trade unions accept geuro over a direct wage cut, When the two mean exactly the same? Do we assume perfect money illusion? If this is an involuntary arrangement , then we wonder What Could be the basis of this law inside the U.S.? Legally, all Contracts are denominated in euros.) *   *   *   *

and.....


http://www.independent.co.uk/news/world/europe/germany-under-pressure-to-sign-up-to-eurozone-stimulus-plan-7778899.html

European Union leaders will tonight pledge to give greater priority to securing economic growth as they increase the pressure on Germany to do more to solve the eurozone crisis.

At an informal dinner in Brussels, several leaders will acknowledge the need for an EU "growth pact" after critics warned that Europe's "collective austerity" is stifling growth in the 27-nation bloc. The change of tone follows the election of the Socialist François Hollande as President of France, who will be attending his first EU summit.

But Angela Merkel, the German Chancellor, is expected to rebuff Mr Hollande's plan for eurozone nations to issue jointly guaranteed eurobonds to allow them to borrow more. Ms Merkel insists that it is not the right time to reduce the pressure on euro members to cut their deficits.

David Cameron backs eurobonds and is expected to side with the pro-growth lobby inside the EU despite sticking to his deficit-reduction strategy in Britain and rejecting calls for a Plan B to jumpstart the flatlining economy.

Yesterday George Osborne, the Chancellor, said the eurozone was reaching a "critical point". He added: "Eurozone countries need to stand behind their currency or face up to the prospect of Greek exit, with all the risks that that could involve. The British Government is doing contingency planning for all potential outcomes. It is our responsibility to ensure that while we work for the best, we prepare for something worse."

EU leaders are unlikely to take any major new initiative on Greece's debt crisis ahead of the country's second election on 17 June. Their key decisions on the "growth pact" and Greece will be put off until their next summit on 28 and 29 June. But Greece could potentially benefit from a European Commission plan to pilot EU "project bonds" to finance cross-border infrastructure schemes on transport, energy and communications. Some €230m (£185m) of EU money could unlock up to €4.6bn of investment. EU leaders will also discuss plans to hand another €10bn to the European Investment Bank to boost growth and jobs.

Herman Van Rompuy, the European Council president, who will chair tonight's talks, signalled the change of gear by saying the EU had to "ensure that fiscal consolidation and growth mutually reinforce each other". In a letter to the 27 leaders about the meeting, he hinted at support for eurobonds by saying: "There should no taboos concerning the longer-term perspective."

Christine Lagarde, the managing director of the International Monetary Fund, said during a visit to London that eurobonds could eventually play a role but understood Germany's reluctance to pool eurozone debts. She said: "The country that would carry the burden would be countries such as Germany and it's certainly understandable that Germany would want to receive in consideration for that sharing of liability significant commitment to improve productivity to structural reforms so it does not continuously carry the weight of the entire zone."

Alexis Tsipras, the leftist leader in Greece, hit back yesterday at claims by Mr Cameron, who has told Greeks that it is now time to decide whether they want to remain part of the single currency by voting for pro-bailout parties in the country's general election next month.

http://www.telegraph.co.uk/finance/financialcrisis/9283191/Angela-Merkel-astonished-by-austerity-debate-as-Germany-left-increasingly-isolated-on-eurobonds.html

The German Chancellor said that the current debate in Europe and beyond “gives the impression that, for us, saving, as such, is pleasurable”.

“It’s just about not spending more than you collect. It’s astonishing that this simple fact leads to such debates,” she said in a speech in Berlin.

Germany has repeatedly insisted that indebted eurozone nations including Greece and Spain must impose sweeping austerity programmes to get their finances under control, while France, Italy, the International Monetary Fund and the Organisation for Co-operation and Development are now stressing the need for pro-growth measures.

Germany again stressed its deep opposition to the idea of pooling eurozone sovereign debt through the introduction of eurobonds, which are supported by those in the pro-growth camp and Britain.

Michael Meister, a member of Ms Merkel’s Christian Democratic Union party, said there was nothing to stop France and Italy from going it alone on common bonds.

“No one is preventing Hollande going ahead with joint bonds for France and Monti for Italy,” he wrote on Twitter, referring to the French and Italian leaders. He said bonds would destroy incentives for the countries concerned to get their public finances under control.

The OECD also waded into the row, pitching itself against Germany by backing calls for eurobonds as part of a “growth compact” to help drag the eurozone back from the brink.

Germany’s increasingly isolated position on eurobonds is likely to be a source of tension as EU leaders gather for a summit in Brussels on Wednesday where they will discuss ways to address the latest phase of the eurozone’s crisis.

There is no sign that Germany is ready to soften its position, either on eurobonds or austerity. Economists at Jefferies estimated that eurobonds would cost Germany an extra €50bn (£40.4bn) a year in debt servicing costs.

“Our view is that, ultimately, euro members will agree on a common eurobond - just don’t expect that moment to come tomorrow or before the Greek situation has been settled one way or another,” said Marchel Alexandrovich of Jefferies.

Investors were feeling optimistic however, and hopes that the summit would produce a positive outcome pushed European markets higher.

The FTSE 100 closed up 1.86pc at 5403.28, while the CAC 40 in France rose 1.88pc, the DAX in Germany closed up 1.65pc, and Spain’s IBEX 35 rose 2.1pc.

Speaking yesterday the British Chancellor, George Osborne, said: “Eurozone countries needs to stand behind their currency or face up to prospect of a Greece exit with all the risks that that could involve.”

The leader of Syriza, the Greek leftist anti-austerity party said Greece would remain in the eurozone even if his party won the election on June 17.

“A vote for the left does not mean that we would leave the euro. Quite the opposite, we would keep the euro,” said Alexis Tsipras.

*  *  *  

http://globaleconomicanalysis.blogspot.com/2012/05/germany-rules-out-eurobonds-for-104th.html

Tuesday, May 22, 2012 4:21 PM

Germany Rules Out Eurobonds for 104th Time; Damned if They Do, Damned if They Don't

I have no idea what the actual number of times Germany Has ruled out Eurobonds. It could be 504 or even 1004. I Made up the number 104 which simply means "a lot".


Nonetheless, the Eurobond idea resurfaces every other week or so, and every time, someone from Germany (typically Merkel, the Bundesbank, or the Finance Minister) rules them out.


Once again, this time under pressure from French president François Hollande, Germany rules out common euro bonds.

 Germany refused to share the debt burden of stressed eurozone peers on Tuesday, ignoring two of the most influential international economic bodies which offered support for proposals championed by Paris, Rome and Brussels ahead of a summit.


Angela Merkel, Germany’s chancellor, has argued that any co-mingling of eurozone debt would remove incentives for southern economies to adopt structural reforms. The calls from the International Monetary Fund and the Organisation for Economic Co-operation and Development came on the eve of Wednesday’s EU summit.

François Hollande, France’s new president, has strongly backed common eurozone bonds – which would ease funding constraints for the eurozone’s stressed periphery but potentially raise German borrowing costs by diluting its creditworthiness across the currency union.


German officials made clear the idea was a non-starter in Berlin.


“There is no way of introducing them under the current [EU] treaties. Indeed, there is an explicit ban on them,” one senior German official said, adding Berlin would not drop its opposition in the foreseeable future. “That’s a firm conviction which will not change in June.”


Diplomats said the summit, which just last week looked like it would be a highly scripted affair on European growth, had become increasingly unpredictable, with leaders struggling with how to respond to the havoc wreaked by political instability in Greece. Officials emphasised that no formal decisions would be taken.


The euro bonds debate could produce fireworks between Mr Hollande and Ms Merkel – a possibility that has captivated officials involved, given the comparatively harmonious Franco-German relationship in the latter years of Nicolas Sarkozy’s tenure. But most diplomats believe Ms Merkel would succeed in blocking any proposal, producing more smoke than fire.

Damned if They Do, Damned if They Don't;


“They say that when Germany and France don’t co-operate, we have a problem,” one senior diplomat from a smaller EU country said. “And when they do, we have a problem, too.”


The paragraph from the article sums up the situation nicely. Europe is scrambling madly for a solution acceptable to everyone, but the only solution that works is the one no one wants to hear: a breakup of the eurozone.

and.....