The Eurogroup finance ministers have inched things forward with their long Monday summit, but the press conference in the early hours of this morning also reaffirmed that many big questions remain.
The first headline is that Spain gets an extra year to meet its 3 per cent deficit-to-GDP ratio target. Just as well, because the country was extremely unlikely to hit that by the end of next year. The Journal reports that a draft statement says this means Spain can now run a 6.3 per cent deficit this year without risking penalties, compared with 5.3 per cent under the 2013 target. Read more
The European Financial Stability Fund chief said on Thursday that the week’s market upheaval in Europe has made it difficult to increase the firepower of the €440bn rescue fund to the €1,000bn the bloc’s leaders had hoped for, says the FT. As investors have fled from bonds issued by highly indebted countries, luring them back by offering insurance on losses – the centrepiece of a plan agreed in Brussels on October 26 – would now probably use up more of the fund’s resources, Klaus Regling, head of the EFSF, said. “The political turmoil that we saw in the last 10 days probably reduces the potential for leverage,” Mr Regling told reporters. “It was always ambitious to have that number, but I’m not ruling it out.” Separately the FT reports the EC lowered its 2012 growth forecast for the eurozone to 0.5 per cent from 1.8 per cent it foresaw in Spring.
And now for something completely different.
In his latest note to clients, Nomura’s Bob Janjuah goes all technical: Read more
Klaus Regling, the chief executive of the European Financial Stability Facility, strives to argue in a recent letter to the FT that he is not in charge of a massive collateralised debt obligation.
For argument’s sake, never mind that the FT noted the EFSF is not technically a CDO in any case. (And cast aside thoughts that Regling doth protest too much, perhaps.) Read more
The sound of crowing from the eurozone following Tuesday’s ultra successful bail-out bond issue. From Wednesday’s Daily Telegraph. Read more
The Economist totally beat us to coming up with a snappy job title for Klaus Regling, the man who took office on July 1 as the chief executive of the European Financial Stability Facility (EFSF).
(Recall: 16 eurozone governments established the EFSF to provide funding guarantees to any member of the single currency who might find itself facing liquidity issues) Read more