http://soberlook.com/2012/08/from-euro-area-summit-to-periphery.html?utm_source=BP_recent
Here is a highly simplified overview using basic diagrams. Solid lines indicate what actually transpired, while dashed lines show expectations at the time.
June 2012:
Between escalating risks of the Spanish banking system failure and Mario Monti's efforts to stabilize Italy's government funding costs, pressure was mounting on the Eurozone to take immediate action. Spain and Italy had somewhat diverging needs, but they came together to ask the Eurozone "core" to come to a decision.
And with the brand new Socialist government in France lead by Hollande, Monti and Rajoy found a new ally. Hollande heralded a shift in the balance of power in the Eurozone (as predicted back in January). Together the three were able to pressure Germany into a new compromise. They reached a broad agreement to centralize bank regulation, provide bailout funds to Spain's banks, and most importantly give the European Stability Mechanism (ESM) the ability to buy periphery bonds in a "flexible manner" and allow the bailout vehicle to rescue banks directly. This was a broad agreement with no visible path to implementation. But as we know from 2011, the devil of the Eurozone multiple proposed solutions has always been in the detail, which was entirely missing by the conclusion of the Euro Area Summit.
July 2012 (first 3 weeks):
It didn't take long for the markets to become disillusioned in the agreement reached at the summit as the implementation got bogged down in the black hole of the EU bureaucracy. The existing Eurozone structures were never set up to decisively deal with rapidly changing market pressures. Spanish yields and spreads hit new records and it became obvious that Spain is now shut out of the capital markets. What's more, due to a change in collateral rules at the ECB, the Spanish banking system (which itself is in the process of receiving a bailout) would not be able to come to the government's rescue as it did in the past. And a Eurozone-wide rescue of Spain was out of the question as it would dwarf that of Ireland, Greece, and Portugal.
http://www.zerohedge.com/news/spain-refuses-be-bailed-out-if-there-are-new-conditions
Submitted by Tyler Durden on 08/07/2012 14:27 -0400
Spain back to playing footsie with the bailout of the State - beggars trying to be choosers. And Greece all over the austerity map once again....
http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_25115_07/08/2012_455967
Kouvelis opposes attempt to revive labor reserve scheme to reduce wage bill
A new meeting between Greece’s coalition leaders on Tuesday failed to yield any results, amid objections from junior partner Democratic Left to plans to revive a labor reserve scheme to reduce the public sector wage bill.
Sources told Kathimerini that Democratic Left chief Fotis Kouvelis expressed his opposition to the measure, leaving Prime Minister Antonis Samaras in no doubt that another option should be considered. Kouvelis pointed out that when the scheme was adopted last year, it was soon abandoned as only a few thousand civil servants were placed in the labor pool, where they earn 60 percent of their salary but do not need to go to work.
PASOK leader Evangelos Venizelos is also said to have expressed his doubts about the scheme, but added that he was also against the idea of mass sackings in the public sector.
Sources said Kouvelis was angry that the idea of reviving the labor pool had been leaked to the press and that it was being considered as an option, given that the measure was not contained in the policy framework drawn up by New Democracy, PASOK and Democratic Left before they formed a coalition government.
Earlier, Finance Minister Yannis Stournaras had met President Karolos Papoulias to inform him about the latest economic developments. Upon exiting the meeting, the minister told journalists that the measures was being considered as part of the effort to find the 11.5 billion euros in savings that Greece needs to make over the next two years to satisfy the troika.
“We will look at the labor reserve because the numbers just don’t add up easily,” he said. “11.5 billion euros is a significant number and we haven’t reached it yet. We still need to find 3.5 to 4 billion euros,” added Stournaras, who told Papoulias there was still “hope” for Greece.
Sources said that to find the remainder of the cuts Greece’s lenders are demanding, Stournaras will need to cross some of the red lines drawn by the parties. This includes scrapping the already-reduced Easter and Christmas bonuses for civil servants and pensioners or making cuts to farmers’ pensions.
http://www.zerohedge.com/news/779-spanish-voters-polled-have-little-or-no-confidence-rajoy
Submitted by Tyler Durden on 08/07/2012 07:33 -0400
http://www.ekathimerini.com/4dcgi/_w_articles_wsite2_1_07/08/2012_455822
The International Monetary Fund is putting pressure on the eurozone to ease Greece’s bailout terms, according to a report in the Wall Street Journal.
“The IMF pressure - which officials said has been clear in private discussions among Greece's official lenders - comes in response to mounting evidence that Greece's deep recession has thrown the country's bailout program woefully off track from targets set earlier this year,” according to WSJ’s Matthew Dalton and Costas Paris.
The IMF wants Greece’s debt to be reduced to “sustainable” levels before it releases more funding as part of the Greek program but this involves options which some eurozone countries are not comfortable with.
The IMF now wants to see the government debt ratio close to 100% of gross domestic product in 2020, when Greece is supposed to have finished repaying EUR33 billion in loans to the IMF, officials told the WSJ. This is 20% percentage points lower than when the IMF and its European partners agreed on the second Greek bailout in February.
But with Greece in deep recession, it would need a substantial change to the Greek program to put the country’s debt on a sustainable path.
“The mildest would be another cut on the interest rate Greece must pay on the bailout loans from euro-zone governments. Greece is set to pay over EUR39 billion in interest payments from 2012 through 2014,” reports the WSJ.
Another option is for eurozone countries to accept haircuts on the bilateral loans they have made to Greece as part of the package.
“The more politically controversial options include having the European Central Bank and the euro zone's national central banks accept a 30% reduction in their Greek bonds, which have a face value of about EUR50 billion, said one official familiar with the discussions,” write Dalton and Paris.
and....
http://www.telegraph.co.uk/finance/debt-crisis-live/9457699/Debt-crisis-live-Italy-remains-mired-in-recession.html
German politicians from across the spectrum have reacted furiously to warnings by Italy’s Mario Monti that Bundestag control over EU debt policies threatens to bring about the “disintegration” of the European project.
SUNDAY, AUGUST 5, 2012
From Euro Area Summit to the periphery "bridge loan" - a quick recap of major events in the Eurozone
The news from the Eurozone continues to dominate markets' direction. Yet the information from the area has been incredibly confusing, even for many who reside in the EU. The mass media has not made things easier by jumping from one event to another, often without connecting these events together. We've gotten numerous requests to try to clarify some of the key events that have taken place just in the last couple of months and what they mean for the euro area going forward.
June 2012:
Between escalating risks of the Spanish banking system failure and Mario Monti's efforts to stabilize Italy's government funding costs, pressure was mounting on the Eurozone to take immediate action. Spain and Italy had somewhat diverging needs, but they came together to ask the Eurozone "core" to come to a decision.
And with the brand new Socialist government in France lead by Hollande, Monti and Rajoy found a new ally. Hollande heralded a shift in the balance of power in the Eurozone (as predicted back in January). Together the three were able to pressure Germany into a new compromise. They reached a broad agreement to centralize bank regulation, provide bailout funds to Spain's banks, and most importantly give the European Stability Mechanism (ESM) the ability to buy periphery bonds in a "flexible manner" and allow the bailout vehicle to rescue banks directly. This was a broad agreement with no visible path to implementation. But as we know from 2011, the devil of the Eurozone multiple proposed solutions has always been in the detail, which was entirely missing by the conclusion of the Euro Area Summit.
July 2012 (first 3 weeks): It didn't take long for the markets to become disillusioned in the agreement reached at the summit as the implementation got bogged down in the black hole of the EU bureaucracy. The existing Eurozone structures were never set up to decisively deal with rapidly changing market pressures. Spanish yields and spreads hit new records and it became obvious that Spain is now shut out of the capital markets. What's more, due to a change in collateral rules at the ECB, the Spanish banking system (which itself is in the process of receiving a bailout) would not be able to come to the government's rescue as it did in the past. And a Eurozone-wide rescue of Spain was out of the question as it would dwarf that of Ireland, Greece, and Portugal.
Last two weeks:
Once the leadership came to the conclusion that the markets won't wait for the new "empowered" ESM - which is not close to being set up, it was time to find some way to "bridge" to the ESM event. In leveraged finance, bankers use what's called "bridge loans" (short-term loans) to provide financing to a company until it is able to bring a bond deal (or even an IPO) into the market. The Eurozone needed one of those and the ECB became the only available option. At this stage, given how desperate the situation has become, the ECB was no longer acting as an "independent" central bank. Instead it was drafted to help hold off the crisis until the euro are institutions put in place the ESM "solution". Using the ECB to only tackle the short end of the curve was a new compromise with Germany that would provide this "bridge loan" to the periphery without taking on long term risk.
Once the leadership came to the conclusion that the markets won't wait for the new "empowered" ESM - which is not close to being set up, it was time to find some way to "bridge" to the ESM event. In leveraged finance, bankers use what's called "bridge loans" (short-term loans) to provide financing to a company until it is able to bring a bond deal (or even an IPO) into the market. The Eurozone needed one of those and the ECB became the only available option. At this stage, given how desperate the situation has become, the ECB was no longer acting as an "independent" central bank. Instead it was drafted to help hold off the crisis until the euro are institutions put in place the ESM "solution". Using the ECB to only tackle the short end of the curve was a new compromise with Germany that would provide this "bridge loan" to the periphery without taking on long term risk.
Bloomberg: - Members of German Chancellor Angela Merkel’s coalition parties signaled they won’t stand in the way of European Central Bank chief Mario Draghi’s plan to buy government bonds.Germany knows that once the ESM is in place, they can control the bond-buying process (to avoid taking "excessive" risks) via their veto power. In the mean time Draghi was brought in to "save the day" (without the full knowledge of some other ECB central bankers) .
The envisaged move to purchase troubled euro states’ [short term] government bonds is “a wise middle way” to solve the region’s debt crisis, Elmar Brok, a European Parliament lawmaker and executive-committee member of Merkel’s Christian Democratic Union party, told Deutschlandfunk radio today.
So what happens now? The ECB will try to quickly implement a backstop program to keep short term periphery rates low to allow Spain and Italy to roll short-term paper, creating a low cost "bridge loan". In the mean time the Eurozone bureaucratic machine will try to implement the ESM structure as envisaged at the Euro Area Summit. But as the area recession deepens, the implementation becomes a race against time and more market volatility is inevitable.
http://www.zerohedge.com/news/spain-refuses-be-bailed-out-if-there-are-new-conditions
Spain Refuses To Be Bailed Out If There Are New Conditions
- Art Cashin
- Bond
- Borrowing Costs
- Credit Line
- European Central Bank
- Eurozone
- Germany
- Gross Domestic Product
- Italy
- Reality
And so the fly in the ointment arrives as beggars are not only choosers but have completely lost their minds. As we explained very, very clearly over the weekend in "In Order To Be Saved, Spain And Italy Must First Be Destroyed", the market, courtesy of its primary function of discounting being completely and utter distorted and destroyed thanks to central planning, "priced in" the fact that Spain will be bailed out in the only possible way: by making a Spanish bailout next to impossible, sending its bonds so much higher that Rajoy could not possibly see any need in demanding a bailout (something which as Art Cashin explained further today will very much infuriate Obama). Well, as often happens, we may have been ahead of the market by a few days. And reality as well: because as of minutes ago Spain's PM confirmed precisely what we warned against - that by frontrunning Spain's destruction, and hence rescue, it has doomed Spain to a fate far worse. From France24: Spain will not seek eurozone financial aid beyond an agreed rescue for its banks if more conditions than those already agreed for recapitalising lenders are attached, an EU source said Tuesday." The problem is that if and when the inevitable bailout demand comes, not only will there be more conditions, but Spain will effectively cede sovereignty to the Troika explicitly, and to Germany implicitly (for the full breakdown see here). Which again begs the question: which came first - the market frontruning the bailout or the government refusing to request a bailout on the market frontrunning the bailout and so ad inf.
This is what we said 3 short days ago:
Therein lies the rub: by pushing the funding costs on the short-end far cheaper, both Rajoy and Monti are now certain to not even consider asking for a bailout - after all the market just validated their failed policies (or so they think)! To the career politician and unappointed technocrat, instead of having to ask for aid, the market's response is one which precludes said aid request... Until, at least such time as the market realizes it was once again manipulated by politicians.....the issue is that by formally admitting failure, it means the end for the current administrations, and a career end of many politicians, for whom preserving their jobs is a matter of survival. It also means civil unrest and disobedience, as it means the ascent of the Troika (and implicitly Germany) to the highest level of government control; what it means to the local citizens is one simple thing: relinquishing sovereign control to an external presence. For those who are unfamiliar with European history, the best laid plans which have as their weakest link the assumption that any proud people will willingly cede to foreign control, always are doomed to failure.Yet this is precisely what the bond market assumed when it sent Spanish and Italian bond yields plunging in the past week.We give what is left of the market a few more days before the delayed correct re-reaction once again establishes itself, and the push for a formal bailout leads to curve inversion all over again, only this time more jawboning will not be enough, and neither will be Draghi's solemn invocation to "believe him." That bridge has now been burned.
And now back to Spanish bond yields soaring in hope that Spain will "agree" to being bailed out.The rest from France24:Prime Minister Mariano Rajoy is under pressure to call in financial assistance for the Spanish state, not just its banks, but is holding off awaiting a European Commission assessment of new spending targets drawn up for 2013 and 2014.The Spanish government said on Friday it planned savings of 102 billion euros ($125 billion) by 2014 as it stepped up efforts to bring its strained public finances back within 3.0 percent of gross domestic product, the normal EU limit.That assessment is unlikely to be complete until mid-September. Eurozone finance ministers are due to meet on September 14-15 in Cyprus, itself in dire financial straits and possibly in need of aid following talks on loans from ally Russia."If the Commission considers that the [Spanish] budgetary plan is satisfactory, there will not be a need for further conditions," the EU source said of Rajoy's position, referring to terms for any subsequent loans from the European Financial Stability Facility or mooted European Central Bank intervention in short-term bond markets.In June, Spain secured a 100 billion euro credit line from the EU for its stricken banking sector but investors fear that with its borrowing costs rising, the country may in the end need a bailout.
Last month, Brussels gave Spain an extra year to balance its books, saying it must bring down its public deficit to 6.3 percent of GDP this year, 4.5 percent next year and then 2.8 percent in 2014.After Spanish borrowing costs skyrocketed in the interim, ECB chief Mario Draghi last week raised the prospect of direct intervention in the bond markets so as to bring down eurozone borrowing costs -- but contingent on government support and subject to conditions."I want to know what these measures are to see if they are adequate," Rajoy said afterwards. "Then I will take the best decision for the general interest of the Spanish people."Here we doubt we have to explain that by "Spanish People" he really means just one Spanish "person"
Spain back to playing footsie with the bailout of the State - beggars trying to be choosers. And Greece all over the austerity map once again....
http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_25115_07/08/2012_455967
Reservations over savings expressed in leaders' meeting
Kouvelis opposes attempt to revive labor reserve scheme to reduce wage bill
 Democratic Left chief Fotis Kouvelis reportedly expressed his opposition to plans to revive a labor reserve scheme to reduce the public sector wage bill |
Sources told Kathimerini that Democratic Left chief Fotis Kouvelis expressed his opposition to the measure, leaving Prime Minister Antonis Samaras in no doubt that another option should be considered. Kouvelis pointed out that when the scheme was adopted last year, it was soon abandoned as only a few thousand civil servants were placed in the labor pool, where they earn 60 percent of their salary but do not need to go to work.
PASOK leader Evangelos Venizelos is also said to have expressed his doubts about the scheme, but added that he was also against the idea of mass sackings in the public sector.
Sources said Kouvelis was angry that the idea of reviving the labor pool had been leaked to the press and that it was being considered as an option, given that the measure was not contained in the policy framework drawn up by New Democracy, PASOK and Democratic Left before they formed a coalition government.
Earlier, Finance Minister Yannis Stournaras had met President Karolos Papoulias to inform him about the latest economic developments. Upon exiting the meeting, the minister told journalists that the measures was being considered as part of the effort to find the 11.5 billion euros in savings that Greece needs to make over the next two years to satisfy the troika.
“We will look at the labor reserve because the numbers just don’t add up easily,” he said. “11.5 billion euros is a significant number and we haven’t reached it yet. We still need to find 3.5 to 4 billion euros,” added Stournaras, who told Papoulias there was still “hope” for Greece.
Sources said that to find the remainder of the cuts Greece’s lenders are demanding, Stournaras will need to cross some of the red lines drawn by the parties. This includes scrapping the already-reduced Easter and Christmas bonuses for civil servants and pensioners or making cuts to farmers’ pensions.
| Speaking to party members earlier in the day, Venizelos doubted whether the cuts would work and predicted that they would worsen the recession, making it last until 2016.
and.....
Stournaras says labor reserve could be revived to help meet targets
After meeting with President Karolos Papoulias on Tuesday, Stournaras revealed that the idea of removing civil servants from their jobs and pay some 60 percent of their salary for a year was being considered as an option to reduce wage costs in the public sector and meet its target of 11.5 billion euros in spending cuts over the next two years. “We will look at the labor reserve because the numbers just don’t add up easily,” he told reporters. “11.5 billion euros is a significant number and we haven’t reached it yet. We still need to fine 3.5 to 4 billion euros [of cuts],” added Stournaras, who told Papoulias there was still “hope” for Greece. Greece has to reduce the number of civil servants it had in 2010 by 150,000 by 2015. Although numbers have come down, there is concern that targets will be missed unless the labor reserve scheme, which was abandoned last year, is revived. “The labor reserve scheme will be re-examined as the numbers do not add up,” a senior government source, who did not rule that more people may follow in coming years, told Kathimerini on Monday. However, the three government coalition partners have been committed to no layoffs in the public sector, even in the agencies and organizations that are to be wound up. On Friday, the government must have finalized cuts totaling 8 billion over the next two years as part of the 11.5-billion-euro package demanded by the troika. So far the figure is around 6.5 billion, while the troika will expect to hear about the measures for the remaining 3.5 billion euros by August 20. It appears that the government is facing serious problems in finalizing the package, despite Prime Minister Antonis Samaras’s instructions to ministers. The Defense Ministry has planned for cuts of 2.6 billion (of which 1 billion in operating expenses), while the Health Ministry’s ambitious target of 1.5 billion in savings looks like falling below 1 billion over the next two years.
|
http://www.zerohedge.com/news/779-spanish-voters-polled-have-little-or-no-confidence-rajoy
77.9% Of Spanish Voters Polled Have Little Or No Confidence In Rajoy
Submitted by J. Luis Martin, director of trumanfactor.com, originally published in El Confidencial
77.9% Of Spanish Voters Polled Have Little Or No Confidence In Rajoy
According to the latest Centro de Investigaciones Sociológicas (CIS) poll, Spanish Prime Minister Mariano Rajoy’s popularity has sunk to the point where 77.9% of the country’s electorate has little or no confidence in him. The survey still shows Rajoy’s conservative Popular Party (PP) ahead of the Socialist Party, however, by 6.7 per cent – eight percentage points down from the PP’s historic election win eight months ago.
A distant leader’s broken promises
Ironically, during his entire his political campaign, and during his time as leader of the opposition, Rajoy’s fundamental message was that the country needed “a shot of confidence” to overcome its economic woes. Rajoy’s promises to implement swift and credible policies that would restore confidence in Spain were pivotal to his landslide electoral victory last November.
However, the complete U-turn his Administration begun only days after taking office has left many feeling betrayed. Broken promises aside, his distant and elusive manners have only added to the detriment of his public image.
Investors also lose confidence
Capital flight from Spain is reaching dangerous levels, as over €163bn left Spain during the first half of the year. As investors dump domestic assets and depositors move their money away, the equivalent to nearly one quarter of the national GDP has exited the country over the past eleven months.
Spain’s contracting economy and uncertainty over the euro zone’s integrity seem to further scare money away from a country facing tremendous financing needs over the next few months.
A “hot autumn” ahead
Social tensions add to the drama encompassing the EU’s fourth-largest economy. As the government’s latest round of tax hikes and budget cuts continue to infuriate public opinion, labor unions appear to be mobilizing for what may expect to be a “hot autumn.” Such is the seriousness of the situation that Spanish King Juan Carlos is to meet with leaders of the country’s two largest labor unions today.
According to the CIS poll, Spaniards continue to consider their political class to be the third most pressing problem with their country (unemployment and the economy take the first two places in the poll). In addition, 39.2 per cent say they do not identify with any of the available political parties.
Urgency to act
A steadfast implementation of the country’s financial sector reform would help ease tensions and restore some of the lost confidence abroad. In addition, Rajoy needs to act upon the ECB’s “invitation” to request assistance from the EFSF to dissipate doubts about the country’s immediate financial future.
Much remains to be done, however, for Rajoy to rally the country behind him and restore the confidence lost at home and abroad.
http://www.ekathimerini.com/4dcgi/_w_articles_wsite2_1_07/08/2012_455822
IMF pressuring eurozone to ease Greek bailout terms, reports WSJ
 |
“The IMF pressure - which officials said has been clear in private discussions among Greece's official lenders - comes in response to mounting evidence that Greece's deep recession has thrown the country's bailout program woefully off track from targets set earlier this year,” according to WSJ’s Matthew Dalton and Costas Paris.
The IMF wants Greece’s debt to be reduced to “sustainable” levels before it releases more funding as part of the Greek program but this involves options which some eurozone countries are not comfortable with.
The IMF now wants to see the government debt ratio close to 100% of gross domestic product in 2020, when Greece is supposed to have finished repaying EUR33 billion in loans to the IMF, officials told the WSJ. This is 20% percentage points lower than when the IMF and its European partners agreed on the second Greek bailout in February.
But with Greece in deep recession, it would need a substantial change to the Greek program to put the country’s debt on a sustainable path.
“The mildest would be another cut on the interest rate Greece must pay on the bailout loans from euro-zone governments. Greece is set to pay over EUR39 billion in interest payments from 2012 through 2014,” reports the WSJ.
Another option is for eurozone countries to accept haircuts on the bilateral loans they have made to Greece as part of the package.
“The more politically controversial options include having the European Central Bank and the euro zone's national central banks accept a 30% reduction in their Greek bonds, which have a face value of about EUR50 billion, said one official familiar with the discussions,” write Dalton and Paris.
Another option is for the European Stability Mechanism to take on the 50 billion euros that is destined for the recapitalization of Greek banks, which until now has been recorded as state debt.
For this option, though, the eurozone has to wait until September 12, when Germany’s constitutional court will rule on whether the ESM is compatible with the country’s legislation.
Until then, the IMF and its eurozone partners will wait to see if Greece lives up to its bailout commitments.
"If it's another case of false Greek promises,» an official familiar with the talks told the WSJ, «what will happen is that the existing funding will stop and Greece will find itself outside the euro zone."
and.....
http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_1_06/08/2012_455759
Leaders focus on privatizations
Coalition chiefs identify 10 assets to be sold first and set legislative priorities for next few weeks
The heads of New Democracy, PASOK and Democratic Left agreed on the 10 public assets they consider to be primed for privatization and discussed the speeding up of dozens of legislative and administrative actions that need to be taken to remove obstacles to this and future rounds of sales. “This is not about auctioning off assets; it is about making better use of public wealth with an emphasis on helping growth and creating jobs,” said PASOK leader Evangelos Venizelos after the meeting with Prime Minister Antonis Samaras and Democratic Left’s Fotis Kouvelis. Finance Minister Yannis Stournaras and Development Minister Costis Hatzidakis also took part in Monday’s meeting, along with the two newly-appointed top officials of Greece’s privatization fund, TAIPED. Sources told Kathimerini that the first public assets and enterprises that are going to be made available to investors are the International Broadcasting Center (currently the Golden Hall shopping mall), the state lottery, Public Gas Corporation (DEPA), the gas grid operator (DESFA), the Elliniko site, the state gambling company (OPAP), the horse racing organization (ODIE), land in Corfu and Rhodes, and 28 real estate properties that will be sold and leased back. It was also agreed that the government’s general secretary, Takis Baltakos, would be responsible for overseeing the effort to complete 77 legislative and administrative acts relating to privatizations, many of which are included in Greece’s bailout terms. Sources said that this will involve coordinating the action of nine ministries. Baltakos is a close associate of the prime minister. Among the legislative acts that need to be completed is one that will lead to the cancellation of the law that requires the state to retain a 51 percent stake in public enterprises considered to be of strategic importance. The law that limits a single investor holding just 20 percent of one of these companies will also be repealed. Regulatory authorities to oversee the privatization of highways, ports, airports and refuse collection also need to be set up.
|
and....
http://www.telegraph.co.uk/finance/debt-crisis-live/9457699/Debt-crisis-live-Italy-remains-mired-in-recession.html
11.39 Italian PM Mario Monti has already pushed through billions in austerity measures during his short term, and this morning his government survived a vote of confidence in the lower house of parliament that sees a further €4.5bn of cuts this year take a step closer to being passed. This afternoon they'll face a similar vote in the Senate of the Republic. Stay tuned for more news on that.
Of course, today we've also had data which shows that Italy remained in recession for a fourth consecutive quarter. It's widely thought that Monti's harsh austerity measures have deepened that recession.
11.29 German factory orders have fallen 1.7pc in June, worse than predicted by some margin - something which is turning into a bit of a trend this morning.
11.05 Greece has held its bond auction, raising €812.5m in six-month debt at slightly lower rates. The average yield was 4.68pc, fractionally cheaper for the Greek government than the last comparable auction's 4.7pc. Total bids reached €1.29bn, showing that there is demand out there.
10.08 Earlier we had disappointing industrial data from Italy, now we have UK news: output was down 2.5pc in June, a lower fall than the widely forecast 3.4pc. I'll leave it up to you to classify that as good news or bad.
10.05 More data from Italy, and more bad news: the economy contracted by 0.7pc in the second quarter, meaning it is yet to haul itself out of recession. This is the fourth contraction in the state's GDP.
09.09 Italy's industrial output fell 1.7pc in the second quarter, year-on-year, a worse-than-expected slump. It's an improvement on the first quarter, which was 2.3pc down year-on-year, but still well into contraction territory. The eurozone's third largest economy has been hit by harsh austerity measures introduced by Mario Monti's technocratic government and designed to bring the country's budget back into line.
08.28 Ambrose Evans-Pritchard writes in today's Daily Telegraph that Germany and Italy are near blows over the euro.
German politicians from across the spectrum have reacted furiously to warnings by Italy’s Mario Monti that Bundestag control over EU debt policies threatens to bring about the “disintegration” of the European project.
The dispute comes as relations between Germany and Italy touch the lowest ebb since the Second World War, with Il Libero publishing a front-page picture of Chancellor Angela Merkel under the headline “Fourth Reich”.
08.23 It was a reasonably calm day on the eurozone front yesterday, but let's take a look at a few of the headlines:
• The European Central Bank didn't buy any sovereign debt on the secondary market last week, according to a statement on its website.
• Plans to introduce a European banking union will be announced on or around September 11, according to an EU official.
• Mariano Rajoy's tenure as Spain's PM is on shaky ground, wroteDavid Gardner in the Financial Times, who claims that the silent Rajoy is deaf to the Spanish emergency.
• Finland could be dragged into recession next year if the global economic slowdown persists, according to the country's finance minister.
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