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France And Germany Veto Increase In Eu Rescue Fund

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http://www.telegraph.co.uk/finance/financetopics/financialcrisis/8255991/France-and-Germany-veto-increase-in-EU-rescue-fund.html

Jose Barroso, head of the European Commission, called on EU leaders to boost the firepower of the EU's €440bn (£366bn) bail-out fund and beef up its role, allowing it to intervene with pre-emptive bond purchases to help states under threat.

"It is important for the markets to know that Eurozone leaders are committed to do whatever is necessary," he said, hoping for action as soon as early February.

He also proposed a "new phase of European integration" with far-reaching oversight of the budgets, pensions, labour markets, and trade flows of EU states to prevent a recurrence of the imbalances that led to the EMU debt crisis.

Mr Barroso said the fund boost was a "precautionary" move, not directed at any one country. The gambit is risky since it may be taken by investors as a sign that Brussels fears imminent contagion to Spain, deemed too big for the current fund.

The response in Paris and Berlin was chilly. "We think the fund is big enough," said Francois Baroin, France's budget minister. German Chancellor Angela Merkel said the bail-out mechanism was "nowhere near exhaustion", adding curtly that she did not wish to debate the matter "any further".

.........

Mark Ostwald from Monument Securities said confusion over the EU bail-out fund is a reminder of EMU's political limits. "We have gone nowhere since the show of unity in December. 'Mr Market' is still saying to EU leaders that they must come up with a mechanism to transfer money from the rich core to the periphery. We are no closer to that," he said.

Charles Dumas at Lombard Street Research said Germany faces an impossible demand. "If the German people go along with plans to prop up the economies of Club Med to save the euro, it means that they will have to pay subsidies for the next decade or two that significantly exceed what they have had to pay for German reunification," he said.

How nice of Mr Market to expect the rich bailout the poor.

Sounds like France/Germany are playing at being Ireland/Greece now by denying that the bailout fund needs more money, a bit like the Ireland et all denying they needed a bailout.

Still it's all contained.

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http://www.telegraph.co.uk/finance/financetopics/financialcrisis/8255991/France-and-Germany-veto-increase-in-EU-rescue-fund.html

How nice of Mr Market to expect the rich bailout the poor.

Sounds like France/Germany are playing at being Ireland/Greece now by denying that the bailout fund needs more money, a bit like the Ireland et all denying they needed a bailout.

Still it's all contained.

I was thinking about this today when I was reading a report from Citibank saying that the fund needs to be trebled and I thought why?

Well basically it is the banks that are stuffed if there is default. So bank after bank after bank produces reports saying basically "we are so fk'ed with loans to the PIIGS you need to bail us out or else." Talk about vested interest.

Also Merkel has to draw a line in the sand otherwise the PIIGS will just take the first amount of money, keep spending and then goa ask Ange for another loan, cue repeat. It would be a never ending problem.

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I was thinking about this today when I was reading a report from Citibank saying that the fund needs to be trebled and I thought why?

Well basically it is the banks that are stuffed if there is default. So bank after bank after bank produces reports saying basically "we are so fk'ed with loans to the PIIGS you need to bail us out or else." Talk about vested interest.

Also Merkel has to draw a line in the sand otherwise the PIIGS will just take the first amount of money, keep spending and then goa ask Ange for another loan, cue repeat. It would be a never ending problem.

A nice summary. This show will go on and on. Low interest rates and more debt the whole way until it all blows up.

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It matters not how big the fund is.

All that matters is that governments balance their budgets over the medium to long term. Fail to do that, and trebling your firepower wont help you. All that will happen is the law of moral hazard will be applied, deficit governments will take you up on your offer to borrow even more money, and the fund will get to own thrice the volume of unrecoverable debt.

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Me thinks they've got a bit cocky after this morning's 'better-than-expected' auction of Spanish debt.

Is that why Banco Santander shares are up today?

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Is that why Banco Santander shares are up today?

Could be. Anyway Santander are in my good books now, they've just announced a new current account with free cash withdrawals abroad (Nationwide recently stopped doing it), so I'll be opening an account shortly. The banks may be w@nkers, but as long as you make sure you're the one taking from them, it's not all bad.

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  • 312 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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