The situation in Europe has now officially become a farce.
While the Equity markets rocketed up between 4-5% last night because of a rumour that Greece, and therefore Europe, would be saved by a new plan to leverage up the EFSF, a large number of people who would actually have to approve the deal were denying such a deal even existed.
German Finance Minister Wolfgang Schaeuble told the cabinet on Tuesday:
.. there were no plans to increase the volume of the European Financial Stability Facility (EFSF) rescue fund or Germany’s maximum contribution
Finland and Dutch PM’s in a joint statement:
… rejected international calls for an expansion of Europe’s bailout facility however, stressing that profligate euro nations in the periphery should enforce budget discipline according to existing treaty obligations.
Spanish Economy Minister Elena Salgado:
“It is not on the table, nor has it been discussed,”
The EIB that was supposed to be running the whole thing:
.. the European Investment Bank just said that it has not been approached to take part in any bailout program involving the European Financial Stability Facility.
German Chancellor Angela Merkel’s junior coalition partner FDP General Secretary Christian Lindner:
“The woman Chancellor must make it clear very quickly that there are no changes to the Rules for EFSF.”
German Bundesbank chief Jens Weidmann has said:
“they would discourage politicians from taking tough decisions to cut budget deficits and weaken faith in the euro.”
Andreas Vosskuhle, head of the German constitutional court:
There is little leeway left for giving up core powers to the EU. If one wants to go beyond this limit – which might be politically legitimate and desirable – then Germany must give itself a new constitution. A referendum would be necessary. This cannot be done without the people
Even Merkel’s own party in the lead up to Thursday’s vote is struggling to come to a concensus on this:
In an internal vote on Tuesday, 11 deputies from Merkel’s CDU/CSU group voted against the motion and two abstained. Coalition sources said they expected between 2 and 5 FDP lawmakers to vote against and up to 6 to abstain.
If more than 19 coalition lawmakers vote against or abstain, Merkel will be dependent on opposition votes in a political humiliation that could weaken her ability to push through future rescues.
Let’s not forget the minnows:
Slovakia could yet derail plans to strengthen the euro zone’s financial rescue fund, after the junior ruling coalition party rejected a proposal from its larger partner on Tuesday aimed at winning its support for expanding the fund’s powers.
Or the raters:
Europe’s efforts to ramp up its fight against the euro zone debt crisis could potentially trigger credit rating downgrades in the region, a top Standard & Poor’s official warned.
And now FT has reported that once again a huge hole has appeared in Greece’s funding:
.. a split has opened in the eurozone over the terms of Greece’s second €109bn bail-out with as many as seven of the bloc’s 17 members arguing for private creditors to swallow a bigger write-down on their Greek bond holdings, according to senior European officials.
The divisions have emerged amid mounting concerns that Athens’ funding needs are much bigger than estimated just two months ago. They threaten to unpick a painfully negotiated deal reached with private sector bond holders in July.
With a poll in the German newspaper Bild showing that 76% of Germans are against providing further aid to Greece and now the news that Greece may require even more bailout funds, all eyes are firmly fixed on the Bundestag for Thursday’s vote.