20th EU Crisis Summit - Solutions or more Fudge ?

[ang]

...Bruno Waterfield
‏.

This is a bad sign RT @SpiegelPeter: Non-eurozone leaders leaving ‪#EU‬ summit. The 17 remain.

[DCon]

it gets worse

zerohedge ‏@zerohedge

Hollande Withholds Endorsement of EU Fiscal Pact. Everything is falling apart

[DCon]

do we laugh or cry?

zerohedge ‏@zerohedge

And more: French president: talks on top EU officials' long-term plan for euro union put off until Oct - AP

[ang]

do we laugh or cry?

That indeed is the question......There is more from Hollande he insists the eurozone problems should be resolved by the 17 EZ members and not the EU 27 and -

@vgoyet

Tonight # Holland decides who is virtuous, refutes the need for fiscal adjustment plans and calls for a rate cut.

“@EconCharlemagne: hint of breakaway euro zone? #Hollande wants European Parliament "in time" to bring eurozone at 17 "to life"”

[DCon]

ESM changes?

He says Spain wants direct bank recapitalization via the ESM (which is believed to be impossible under current ratifications)

http://www.forexlive.com/blog/2012/0...aly-and-spain/

[PaddyJoe]

The German parliament vote on the fiscal pact and the ESM is due at the unusually late time of 9pm on Friday evening. Merkel is due to give a keynote speech before the vote which requires a two thirds majority. That looked safe up until now but if the summit falls apart that ratification could be thrown into doubt.

[ang]

ESM changes?



http://www.forexlive.com/blog/2012/0...aly-and-spain/

Could well be but could they get away with no change for one ? -

@cassiustweets

Some suggestions coming from #euco (via Spanish) that Merkel will allow direct recap for spanish banks only

[ang]

The German parliament vote on the fiscal pact and the ESM is due at the unusually late time of 9pm on Friday evening. Merkel is due to give a keynote speech before the vote which requires a two thirds majority. That looked safe up until now but if the summit falls apart that ratification could be thrown into doubt.

Indeed PJ. Angela has to leave the summit early to get back for the vote but Italy are threatening if no resolution bloodbath on markets monday -

“Without a deal about something, there will be a bloodbath on markets on Monday,” an Italian government official tells Linkiesta.
So that’s the Italian strategy? Threaten financial market calamity? It was cute when Greece and Tsipras were doing it but this is ridiculous. Playing a game of brinksmanship works once, maybe twice, but it’s no way to negotiate with your neighbors.

http://www.forexlive.com/blog/2012/0...arket-blowout/

[DCon]

it was pre-meditated. That will not go down well

Jeremy Fleming ‏@JeremyFleming6

Hollande: Spain, Italy told me in advance of plan to block the agreement: "I understand their fears"

[PaddyJoe]

Could well be but could they get away with no change for one ? -

@cassiustweets

Some suggestions coming from #euco (via Spanish) that Merkel will allow direct recap for spanish banks only

That's what EFE and El País are saying.
Berlin is supposed to have accepted putting this option in a draft paper to be discussed at Friday´s working breakfast for the 17 EZ countries.
The ´many conditions´and ´guarantees´ that Berlin wants are still to be discussed including a condition that this deal would apply only to Spanish banks.
How long before a German denial?
http://www.huffingtonpost.es/2012/06...ia-ya-cediendo

[ang]

it was pre-meditated. That will not go down well

Some German tweets saying Hollande betrayed Merkel

Back to Italy -

Politica Italiana ‏@ItalianPolitics
#Italy would be guaranteed an interest rate of 4%. If the markets charged Italy more, the bailout fund would take the difference in.

[ang]

To be expected -

Bruno Waterfield ‏@BrunoBrussels
#eurozone: EU working flat out to bend and twist ESM treaty to directly recap banks (anniunced after B,stag vote naturally) - rule of law?

[ang]

Summit continues with discussion on Italian and Spanish debt burden relief. (bonds)

Hollande having the report on Towards a Genuine Economic and Monetary Union taken off the table until October was good imo, as Hollande said the report should have been presented at Ministerial level earlier.

Also on report -

#Hollande: challenge to Commission. we will renegotiate country specific recommendations; will only implement what we agree with

I wonder where they found pegs big enough for Enda and Lucinda noses whilst having to endure the infighting and blackmail amongst our partners !

[ang]

It seemed that Hollande may have been directing his Ire at David Cameron when he said the EZ crisis should be resolved by the EZ 17 and not the EU 27 that may have been because he was irked at this which happened during a mini side summit with Hollande, Merkel and Cameron. David likes to wield the veto if necessary.

Britain blocks patent deal

http://euobserver.com/1016/116805

[DCon]

Europe is saved!

"We affirm that it is imperative to break the vicious circle between banks and sovereigns. The Commission will present Proposals on the basis of Article 127(6) for a single supervisory mechanism shortly. We ask the Council to consider these Proposals as a matter of urgency by the end of 2012. When an effective single supervisory mechanism is established, involving the ECB, for banks in the euro area the ESM could, following a regular decision, have the possibility to recapitalize banks directly. This would rely on appropriate conditionality, including compliance with state aid rules, which should be institution-specific, sector-specific or economy-wide and would be formalised in a Memorandum of Understanding. The Eurogroup will examine the situation of the Irish financial sector with the view of further improving the sustainability of the well-performing adjustment programme. Similar cases will be treated equally.



We urge the rapid conclusion of the Memorandum of Understanding attached to the financial support to Spain for recapitalisation of its banking sector. We reaffirm that the financial assistance will be provided by the EFSF until the ESM becomes available, and that it will then be transferred to the ESM, without gaining seniority status.



We affirm our strong commitment to do what is necessary to ensure the financial stability of the euro area, in particular by using the existing EFSF/ESM instruments in a flexible and efficient manner in order to stabilise markets for Member States respecting their Country Specific Recommendations and their other commitments including their respective timelines, under the European Semester, the Stability and Growth Pact and the Macroeconomic Imbalances Procedure. These conditions should be reflected in a Memorandum of Understanding. We welcome that the ECB has agreed to serve as an agent to EFSF/ESM in conducting market operations in an effective and efficient manner.

The early Friday morning release of an entirely conditional 'plan' for a 'plan' that will likely require the ESM contracts to be torn up and a new contract to be re-ratified (by ALL members - including Finland and Germany), due to the stripping of the ESM seniority via the EFSF 'workaround', was high-fived by any and all EU leader still standing.

http://www.zerohedge.com/news/full-e...hy-washy-glory