Domino Effect at Work with Euro - Last Days of the Eurozone ? - UPDATE: S & P put EU on Negative Watch

[ang]

BRUSSELS (Reuters) - The leaders of Germany and France clinched agreement on a joint European-IMF financial safety net for debt-stricken Greece just before an EU summit on Thursday, the French president's office said.

The accord, which set the stage for a wider deal among euro zone leaders, is intended to reassure nervous financial markets and arrest a crippling rise in Greece' borrowing costs after a debt crisis that has shaken confidence in the euro.

The European Central Bank also took a key step to support Greece by extending softer rules on collateral so that Athens does not risk a guillotine on its debt at the end of this year.

Looks like Angela convinced Sarkozy of IMF involvement.

http://uk.reuters.com/article/idUKTRE62O04E20100325

[C. Flower]

There's another thread here on the latest agreement announcement, that I won't merge but link here
http://www.politicalworld.org/showthread.php?t=527

[C. Flower]

The question here is whether this is the end of the federal model of Europe. The federal idea allowed independent national entities to have a shared market, without having responsibility for each other economically.

The Greek deal (if it holds together) provides for "voluntary" supports from individual states to one member statecombined with serious constraints on national economic policy, with allowing the IMF, a US dominated economic manager, a say within the Eurozone.

This is an enormous double whammy blow to the federal model.

[Xray]

Logically we need a "Europearn economic government". Pretending we can have same currency with different taxes, wages, pensions and ways of spending is simply not credible any longer.

[ang]

Germany have undoubtedly taken the lead here. This has all been about forcing change and bringing people into line.
There will be changes to treaties to ensure tighter fiscal control within the EU.

On the other side of the coin Germany would want to start increasing it's imports, if everybody is banking on exporting their way out of this, then stagnation will persist.

If Germany wants to lead the way they need to start spending.

[C. Flower]

If you look at the Krugman debate on tarriffs in the United States, it seems more likely that there will be protectionism. This is likely to be the biggest debate of the year.

[RighteousAnger]

The IMF is a red herring, to avoid the german taxpayer thinking theyre paying for Greeces debts. In reality the IMF will not be calling the shots. The EU donor countries will be calling the shots.

Thats what the France Germany et al really want. To be able to order Greece to sell their productive assets and utilities to french and german companies. Veolia and Siemens will get their hands on Greek utilities and keep the IMF/yanks out.

If Ireland has to pony up €250m for the greek bailout, our companies should be getting a shot at greek assets as well. Thats only fair.

[ang]

Interesting article Here:-

PARIS/ATHENS (Reuters) - In a bizarre twist to the Greek debt crisis, France and Germany are pressing Greece to buy their gunboats and warplanes, even as they urge it to cut public spending and curb its deficit.

Indeed, some Greek officials privately say Paris and Berlin are using the crisis as leverage to advance arms contracts or settle payment disputes, just when the Greeks are trying to reduce defense spending.

http://uk.reuters.com/article/idUKTRE62M1Q520100323

[ang]

Brian Cowen doesn't even want to think about another referendum:-

TAOISEACH Brian Cowen was battling with Germany last night to avoid having to call a new referendum to change the rules of the euro.


EU expert Peter Ludlow explained that she needs this if she is to avoid any agreement on a bailout ending up before the German Constitutional Court again.

"Merkel has to have the treaty change," said Mr Ludlow.

Mr Cowen was joined by the Dutch prime minister in trying to have any wording that would imply a treaty change removed from the proposed text last night.

Irish sources played down the issue however, saying that there was still a long way to go before that issue would have to be decided.


Read more: http://www.irishexaminer.com/ireland...#ixzz0jIGyDLA5

[ang]

IMF also seem to be in favour of the eurozone co-ordinating fiscal policy:-

IMF Managing Director Dominique Strauss-Kahn said that even if Greece managed to pull back from the brink, the emergency over its finances had laid bare the failure of euro zone countries to coordinate their economic policymaking.

"The problem today is that most big decisions on economic policy in the euro zone are taken by governments looking at their own interests and their own people," he told Reuters in an interview during a one-day visit to Poland.

"That cannot work in a single currency zone," he added.

http://www.reuters.com/article/idUSTRE62S3GB20100329

[C. Flower]

The markets have slid rapidly following yet another clear enough indication from Merkel that Germany won't be making any signficant bail out and Standard and Poor have downgraded Greek bonds to junk, in anticipation of default.

The strains on the eurozone are worsening by the week. It is simply not possible to have a single currency without financial transfers between regions.

http://www.finfacts.ie/irishfinancen..._1019553.shtml

[charley]

is it possible for germany and france to cut the underperformers loose.is there a bouncer clause .

[Xray]

There might be a euro, just not a Greece. Its catch up or get left behind time by the looks of it.

[C. Flower]

is it possible for germany and france to cut the underperformers loose.is there a bouncer clause .

It would make more sense for Germany to leave.

Debtors cant afford to, as they would have to pay back euros with a devalued currency.

[Xray]

It would make more sense for Germany to leave.

Debtors cant afford to, as they would have to pay back euros with a devalued currency.

Or not pay back. Germany will stick with the old EU crowd, they love being like one country. Everyone else might be left behind, we could go either way. We are liked enough, play the game and are too small to be any threat. The UK could be badly burnt. We might need to do some fast thinking. Or rather cowen will have to.

Great political excuse to default. "It was the Germans fault"