Thursday, 29 September 2011

Greece prepares for audit as nation boils over


RT






Germany poised to vote in favour of European financial stability facility
Resounding 'yes' vote will help accelerate plans to establish a permanent European monetary fund

Wednesday 28 September 2011 18.31 BST


The German parliament is expected to approve enhanced powers for the eurozone's bailout fund on Thursday as plans to set up a fully fledged European monetary fund (EMF) gather pace.

Senior European officials believe Berlin will revisit proposals for an EMF – first raised by German finance minister Wolfgang Schäuble in spring last year and revived by French president Nicolas Sarkozy in July this year – once the Bundestag vote is secured.

The only question is the scale of the majority Chancellor Angela Merkel will win for expanding the financial guarantees available to temporary precursor of an EMF, the European financial stability facility (EFSF), with markets hoping for a reassuringly large margin of victory.

On Wednesday the Finnish parliament approved the enhanced EFSF, the ninth out of the 17 eurozone states to do so. Separately, the European parliament voted overwhelmingly in favour of the so-called "six-pack" series of laws to impose tougher budgetary discipline on the eurozone's 17 members and help to prevent the flare-up of future sovereign debt crises.

It also emerged that the "troika" of experts from the EU, International Monetary Fund and European Central Bank will be in Athens on Thursday to test whether Greece is complying with the terms of its rescue through savage budget cuts and can therefore be awarded the sixth and latest tranche of its initial €110bn (£95bn) bailout, worth €8bn.

Merkel told Greek television that the second rescue package, worth €109bn, might have to be renegotiated amid suggestions this would entail bondholders accepting "haircuts" – write-offs on the debts they are owed – of up to 50% rather than the 21% agreed in July.

Sources have indicated that Greece has enough cash to meet its bills, including the salaries of public servants, until the end of next month but that eurozone finance ministers will approve the release of the €8bn as early as 15 October, when they will hold an unscheduled meeting on the issue.

For article GO HERE






Growing Isolation in Germany as Merkel's Allies Abandon Her; Polls Show 75% of Germans Oppose More Bailouts; Clock Ran Out of Time



28 September, 2011

German Chancellor Angela Merkel will likely survive a key vote on Thursday to expand the EFSF bailout fund, but passage now depends on support from the opposition.

Even more telling is the increasing isolation sentiment in Germany. Polls show shows three-quarters of Germans are against the expanded European rescue fund that's subject to Thursday's vote. So, who is it that politicians represent?

The Wall Street Journal reports Germans Reconsider Ties to Europe

“When German lawmakers vote Thursday on whether to put more money into Europe's bailout fund—a step many investors see as essential to prevent a market panic—several conservative deputies, including Wolfgang Bosbach, a prominent champion of European integration, are expected to vote "no." Mr. Bosbach, a high-ranking conservative in Ms. Merkel's Christian Democratic Union, has recently become an outspoken critic of the bailout strategy.

"The first medicine didn't work, and now we are simply doubling the dose," said the lanky Mr. Bosbach of the Greek debt crisis. "My fear is that when the big bang happens, it won't just be us who will have to pay but generations hereafter."

The lawmaker rebellion underscores a broader shift among Germans about their nation's role in Europe since the crisis erupted nearly two years ago. While the Thursday vote is expected to pass, and a vast majority of Germans continue to feel a strong, historical commitment to Europe, with a common currency as its anchor, many have grown doubtful of whether it's worth the ever-growing cost of saving the euro.

A poll for national German broadcaster ZDF earlier this month shows three-quarters of Germans are against the expanded European rescue fund that's subject to Thursday's vote.

The measures before German parliament today would nearly double the main euro-zone's bailout fund's lending capacity to €440 billion ($595 billion) and allow the fund to buy sovereign bonds in the open market.

Germany's contribution to the new, expanded rescue loan package is €211 billion, still less than half the €500 billion it pledged to bail out its banks in 2008. But many see the European Central Bank's moves to buy billions of euros in low-grade government bonds of southern European countries as another sign that European institutions are slipping away from them.

Even more unpalatable is the prospect of making the euro zone collectively liable for its members' debts, as a growing chorus of European officials have recently urged. Many argue so-called euro bonds, which Ms. Merkel has steadfastly opposed, are the bulwark to relieve financial pressure on debt-ridden members and underpin the euro zone's full fiscal union.

But to Germans, it would mean relinquishing their hard-won low borrowing rates to pay for the largess of more free-wheeling members.

"Ultimately the euro-bond issue will come to a head, and Ms. Merkel will have an impossible dilemma," says one senior German coalition lawmaker. "If she goes back to the German people with [euro bonds], she is out. If she doesn't, she will be a very lonely person in Europe”."
Merkel's Clock Ran Out of Time
The vote in Germany is a foregone conclusion, but it is the end of the line for Merkel, whether or not she needs opposition votes for passage.

She is taking a stance 75% of the nation does not agree with, and that stance is guaranteed not to work. The German court nixed Eurobonds, permanent bailout funds, and leveraged use of the EFSF.

Greece is going to need more and there is no more to give. Time will tell.

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