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Posts Tagged ‘Euro’

The world economy: Powering down

Posted by Ram Kumar Shrestha on July 7, 2012

More months of uncertainty about the euro area will weigh on the global economy

EUROPEAN leaders delivered rather more progress in tackling their interminable debt crisis than had been expected when they met in Brussels on June 28th and 29th. They decided, among other things, to allow the new permanent bail-out fund to recapitalise banks in ailing economies directly rather than via their governments. They also enabled rescue funds to buy the government bonds of struggling countries without imposing such strict conditions as before.

The euro promptly rose; stockmarkets regained some vim; the oil price spiked (see article). Government-bond yields fell in Spain and Italy; they also tumbled in Ireland on expectations that it will gain some retrospective relief from the heavy costs of its banking clear-up. In response, the Irish government decided to raise money by issuing short-term bills on July 5th, its first such auction since 2010.

But the June summit also delivered rather less than the market rally suggested. In theory, the agreement promises to break the self-reinforcing link between weak governments and weak banks. In practice, that will not happen until the European Central Bank (ECB) is put in charge of euro-area banking supervision, which may take a lot longer than the planned six months. Before then a deal stitched together in the bleary hours could well snag on legal difficulties about redefining the permanent fund’s remit without changing the treaty that set it up, or on political objections in smaller northern economies—Finland, for example, doesn’t like the idea of using the rescue funds to buy government bonds in secondary markets. Meanwhile, Greece has lost none of its capacity to cause trouble, as a new, weak government tries to extract concessions from creditor nations. Read the rest of this entry »

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Greece’s Exit From The Euro Zone Approaches, While Europe Fiddles

Posted by Ram Kumar Shrestha on May 25, 2012

By Mark Gonglof

Greek Exit Euro Zone
A Greek flag flies next to a statue of ancient Greek philosopher Socrates in the center of Athens on 23 May, 2012. European leaders are considering the repercussions of Greece leaving the euro zone.

Europe and Greece are at the stage in their stormy marriage where they are consulting with divorce lawyers. And we may all feel the pain of their breakup.

On Thursday a Markit Economics indextracking European service-sector and factory activity in May tumbled to its lowest level since June 2009, suggesting a deeper economic contraction. A separate Markit index of German factory activity also tumbled, as did an Ifo Institute index of German corporate confidence, both suggesting the core of the European economy is suffering, too.

Meanwhile, new public polling in Greece showed the anti-austerity Syriza partygaining more support than ever ahead of elections scheduled for June 17 — even as 85 percent of Greeks polled said they wanted the country to stay in the euro zone.

A formal European summit is scheduled for the end of June, several days after the Greek election. Many observers fear that, by then, it will be too late for decisive action to keep Greece in the euro zone.

The euro fell on Thursday to $1.253, its lowest level in nearly two years. But European stocks rallied, in part on a hope that the European Central Bank will come to the rescue with rate cuts and fresh support for struggling sovereign debt. Germany’s DAX index edged up by about 0.5 percent, while France’s CAC 40 rose 1.2 percent. Read the rest of this entry »

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The Euro – Going From Bad to Worse

Posted by Ram Kumar Shrestha on April 27, 2012

By Sir Christopher Meyer, Former British Ambassador to the United States and Germany, former Chairman of the Press Complaints Commission

The markets have steadied a bit after their loss of nerve on Monday. But you can’t help feeling that it is a bit like a climber, sliding down a glacier to his inevitable doom, who breaks his fall for a while on a crumbling ledge that soon will give way.

Things in Euroland have taken a bad turn for the worse – and it’s the politics, stupid. It is not just the uncertainty about the second round of French presidential elections on 6 May. François Hollande, the Socialist leader, will probably win, because it will be easier for him than for Nicolas Sarkozy to pick up votes from those whose candidates were knocked out in the first round. But the energetic Sarko should never be underestimated. He is pitching his campaign hard to gain votes from the hard Right supporters of Marine Le Pen. Herein lies the problem for the euro and for Germany.

It almost doesn’t matter who wins the election. The fiscal compact agreed in principle by 25 out of 27 European leaders in January – “a kind of German straitjacket for the fiscally wayward”, to quote Stephen King, group chief economist of HSBC – is Angela Merkel’s pride and joy, her answer to all the eurozone’s difficulties. Typically, like the euro itself, it has been designed to make everyone more like Germany. Hollande has already made it a plank of his campaign to renegotiate the compact. Meanwhile, as Sarkozy moves ever rightwards, striking a strongly nationalist tone (and risking the estrangement of centrist voters), he puts himself increasingly at odds with a compact designed to create greater fiscal union on German terms. If Sarko wins, it is hard to see how Merkozy, never the warmest of unions, can simply pick up where they left off. Read the rest of this entry »

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Must-Reads from Around the World: March 20, 2012

Posted by Ram Kumar Shrestha on March 20, 2012

Syrian President Bashar Assad speaking during a Ramadan Iftar banquet in honor of Muslim clergymen, in Damascus, Syria, 24 August 2011. (Photo: SANA / EPA)

SYRIAN PRESIDENT BASHAR ASSAD SPEAKING DURING A RAMADAN IFTAR BANQUET IN HONOR OF MUSLIM CLERGYMEN, IN DAMASCUS, SYRIA, 24 AUGUST 2011. (PHOTO: SANA / EPA)

More Syria Leaks – Al Jazeera reveals details from confidential Syrian intelligence and security documents handed over by one of the government’s most trusted officials who recently fled to Turkey. The trove shows President Bashar Assad’s strategy to suppress anti-government protests, including orders to stop protesters from getting into Damascus and detailed security plans for crushing protests in the cities of Aleppo and Idlib, as well as warnings about countries trying to influence Syrian diplomats to defect and indications the government spied on last year’s Arab League monitoring mission in Syria. Read the rest of this entry »

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Clegg Warns Against ‘Rivalry And Isolation’ Within Eurozone

Posted by Ram Kumar Shrestha on January 9, 2012

 

Nick Clegg has once again distanced himself from David Cameron’s position on the eurozone crisis, telling a gathering of European leaders in London of the need to avoid “needless rivalry and isolation”.

The deputy prime minister had invited various EU leaders, including the prime minister of the Netherlands, to the meeting in London, where they agreed a statement.

“Unless we can tackle another underlying cause of the crisis – Europe’s lack of global competitiveness – this crisis will be the first of many,” it said.

Clegg’s comments came after David Cameron earlier told Sky News that Europe needed to re-balance its economy to tackle the divide between Germany and Southern Europe.

Describing the current arrangements to prevent a collapse of the eurozone as “sticking plaster steps”, Cameron said: “But that is only the short term. The longer term is that you have got to address the fact that there is a lack of competitiveness between Germany on the one hand and many of the southern European countries on the other.

But Clegg went further, telling fellow European leaders: “We can only address these problems by pulling together,” he said.

“The one lesson we have learnt over and over again in Europe, to our cost, is that we are stronger when we are together and weaker when we are apart.

“It is immensely important to work as liberals, in all our different countries, in all our different ways, to promote unity over disunity and to promote co-operation rather than needless rivalry and isolation.”

Read the Article at HuffingtonPost

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David Cameron Blocks Eurozone Deal Putting UK At Risk Of Isolation

Posted by Ram Kumar Shrestha on December 9, 2011

Prime Minister David Cameron has been criticised for “isolating” the UK from the EU after he vetoed a crucial treaty designed to deal with the eurozone crisis because it was “not in Britain’s national interest”.

The treaty governing all 27 EU members is now likely to be abandoned, but the 17 eurozone countries will continue to negotiate a separate stability pact, and nine of the 10 EU members not in the single currency have chosen to endorse that process.

The UK will be the only EU member left outside the deal, the Council of Europe has indicated, despite earlier suggestions that Sweden, Hungary and the Czech Republic would not take part.

The move was criticised by Labour leader Ed Milliband, who said that Cameron had “spectacularly mishandled” the negotiations. Some Lib Dems also attacked the decision, with LibDem MEP chief whip Chris Davies saying that it had left the UK “isolated”.

Click Here To Read Our Liveblog For All The Latest Updates

Click Here To Read The Full Statement On The Deal By The EU’s Leaders

Countries who sign up to the stability agreement are likely to be forced to have balanced budgets, and a structural deficit of not more than 0.5% of gross domestic product.

The deal also includes sanctions for nations if their deficit is larger than 3% of GPD.

German Chancellor Angela Merkel said that the EU had “learned from the mistakes of the past”.

In a press conference on Friday she said: “The British were never part of the euro, they had an opt out from the beginning so we are familiar with the situation.

 

Read the Article at HuffingtonPost

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David Cameron May Block Treaty Designed To Rescue Euro

Posted by Ram Kumar Shrestha on December 6, 2011

David Cameron has warned that he will block plans for a new EU Treaty unless European leaders agree to a list of British demands.

The Prime Minister insisted that if eurozone countries want to use the “institutions of Europe” to rescue the single currency, they will have to back a number of “British safeguards” in return.

French president Nicolas Sarkozy and German chancellor Angela Merkel renewed calls for reform of the treaty after emergency talks in Paris. The aim would be to allow far tougher rules and sanctions governing the eurozone in future to reassure markets about the euro’s long-term stability.

Mr Cameron said he was heading to talks in Brussels later this week “to defend and promote British interests”.

“Now, the most important British interest right now is to sort out the problem in the eurozone that is having the chilling effect on our economy that I have spoken about,” he said.

“That obviously means eurozone countries doing more together and if they choose to use the European Treaty to do that, then obviously there will be British safeguards and British interests that I will want to insist on. And I won’t sign a treaty that doesn’t have those safeguards in it, around things like, of course, the importance of the single market and financial services.

“Now if they choose to go ahead with a separate treaty, then clearly that is not a treaty that Britain would be signing or would be amending but, of course, if they want to use the European institutions, then we will be insisting on the safeguards and the protections that Britain needs.

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It’s official – The Euro is breaking up!

Posted by Ram Kumar Shrestha on November 6, 2011

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Eurozone Debt Crisis: European Leaders Reach Agreement Over Greek Debt

Posted by Ram Kumar Shrestha on October 27, 2011

 
One step (agreement­) to sort out the Euro debt crisis appeared, however; another and more important step (implement­ation of the agreement) to be faced:

European leaders have reached a three-pronged agreement to resolve the eurozone debt crisis, including a deal that will halve Greek debt.

World stocks and the euro rose to their highest levels in nearly two months after the announcement of the deal on Thursday morning.

Banks were major gainers as European stock markets rose to hit three month highs on Thursday. The Dow Jones Stoxx Banks index, which aggregates the performance of European banks, was up nearly 5% in early trade. The German Dax and French CAC40 rose by 3.8% and 3.6% respectively.

Athens will also receive another bailout of around €100bn, scheduled to be released in early 2012, while the overall bailout fund will be increased to €1tn (£872bn).

Read the Article at HuffingtonPost

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Fears Of A Eurozone Split As Greece Plumbs New Depths In Debt Crisis

Posted by Ram Kumar Shrestha on September 28, 2011


Unity among diversity is the best way, however; very challengin­g and difficult task.
Read the Article at HuffingtonPost

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Eurozone Running Of Time As Economists Run Out Of Metaphors

Posted by Ram Kumar Shrestha on August 18, 2011


Result of interest conflict and problems in each country.
Read the Article at HuffingtonPost

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Sarkozy And Merkel Call For A ‘True European Economic Government’

Posted by Ram Kumar Shrestha on August 17, 2011


What does that “True” mean?
Read the Article at HuffingtonPost

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