Germany

It was something of a mystery. Emergency conference calls about the future of the Eurozone were being made yesterday, but there was no news of those discussions. As it turned out, this was for the best of all possible reasons: there was no news to report. Angela Merkel and Nicolas Sarkozy announced no new measures to alleviate the sovereign debt crisis; rather, they merely declared “solidarity” with Greece and assured the markets that Greece would not be forced from the single currency. Their words seem to have assuaged the markets for the moment, but only the most brazen optimist would bet on the rally being long lived. Tests of confidence

Angela Merkel, Nicolas Sarkozy and George Papandreou are in crisis talks about Greek debt. There are rumours that they are preparing an “orderly default” for Greece. But, officially, Merkel is still pressing ahead with implementing the existing Greek debt deals. This meeting also has a domestic context for Merkel. According to the FT, she is determined to stamp on the growing disquiet within her governing coalition over the Eurozone crisis and is pleading for calm resolve. It remains to be seen if she succeeds.  The danger of contagion within the Eurozone remains and concerns about the exposure of French banks persist, which is doubly worrying for Nicolas Sarkozy given the proximity

As August draws to a close, Europe is bracing itself for a series of September sovereign debt crises. Events in Germany at the moment have the potential to make these crises into events that could break the back of the Eurozone. As Ambrose Evans-Pritchard reports, Chancellor Merkel might not have the votes to push the European Financial Stability Facility through the German parliament. Merkel is currently under attack from all angles in Germany. Helmut Kohl has criticised her foreign policy, while the German president has implied that she should not have let the European Central Bank buy up so many poor quality bonds. It is now possible to see her coalition

The Eurozone’s political crisis is deepening. Further to the news that individual member states were seeking their own bilateral deals with Greece to insure their taxpayers’ money from default, the FT reports that disagreements are emerging over how these deals should be conducted. Holland objects that Finland’s accord with Athens relies on Greece using EU bailout funds as collateral. “The Netherlands is no supporter of this proposal,” Jan Kees de Jager, the Dutch finance minister, said. “It is not compatible with the principle of equal treatment of all euro countries.” Moody’s, the credit rating agency, has said that this affair “confirms that Europe is conflicted over the very decision to provide financial support

Banks and financial institutions endured a painful day’s trading, following Angela Merkel and Nicolas Sarkozy’s announcement yesterday that the Eurozone should adopt a ‘Tobin tax’, a charge on financial transactions. Once again, M&S chose piecemeal changes over the grand structural scheme desired by markets. The Tobin tax was just one proposal of three. The other two were: to create “genuine economic governance of the Eurozone” under, for the moment, EU President Herbert van Rompuy. The second: to impose a ‘Golden Rule’ on the budgets of Eurozone members. The ‘Golden Rule’ will bind national parliaments to agree to limits on national debt levels and impose statutory requirements on mastering budget deficits. The

The American historian Walter Russell-Mead has a cynical — but very possibly accurate — take on what the French are trying to persuade the Germans to accept with their plan for Eurobonds: ‘France’s clear short term goal is to commit Germany to underwrite debts from weak EU states.  That not only staves off a crisis that threatens to engulf France; by putting Germany on as a co-signer for Greek, Italian and Spanish loans, France will ensure that Germany’s credit rating will not be better than France’s. The French will accept almost any German rules to limit the ability of countries like Greece to run up new debts.  It is in

It was a problem that would be fixed with a snap of the Commissioners’ manicured fingers, but now fresh euro-storms are louring in the near distance. As predicted over the weekend, the markets reacted to the European Banking Authority’s deeply flawed stress tests with fevered concern and a clear note of contempt. The FTSE shed 90 points yesterday, with banks among the day’s biggest losers. The performance in Frankfurt and Paris was equally baleful, as investors fled for safe commodity stocks. As Fraser has noted, Allister Heath argues that the Eurozone crisis is responsible for the booming price of gold. The markets have recovered slightly this morning; but that does

The news that the EU seeks a budget of £1 trillion between 2013 and 2020 inspired disbelief rather than ire. President Barroso’s almost childlike insistence that the proposal was ‘relatively small’ was amusing, certainly not alarming. It’s a classic EU trick: pitch for 5 per cent and a string of crazy financial measures (including a ‘Tobin tax’ on financial transactions) in the hope obtaining more modest gains of say 2 per cent. Barroso will also throw the odd concession into the bargain: the announcement of a £5.4bn saving on the Commission’s staffing costs represents a concession. But, Barroso has his work cut out to secure even a 1 per cent