Europe plods on

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The excitement about the leveraging of the EFSF seems to have died off so we are back to concentrating on the original EFSF changes. Europe moved a bit closer to that overnight with Finland’s parliament approving changes to Europe’s temporary bailout fund. The parliament voted 103 for, 66 against and 31 abstaining.

The changes to the EFSF include increasing the amount of money available to €440 billion from a previous €250 billion, allowing the fund to be used to recapitalize banks, buy bonds in the secondary market and provide new lines of credit to any other nations that require it that aren’t already receiving some form of assistance.

The vote now moves to Germany where it is also expected to pass. After that there is Estonia, Malta, Slovakia, Netherlands, Cyprus and Portugal some of which aren’t particularly happy with the changes and there is definitely the risk of a “no” vote. There is definitely that potential in Estonia and Malta, but the one I am watching is Slovakia:

The senior governing Slovak Christian Union party, or SDKU-DS, Wednesday said it still wants to hold talks with its coalition partner Freedom and Solidarity, or SaS, over their rejection to support the amendments to the European Financial Stability Facility agreed by European leaders on Jul 21.

“SDKU-DS will use all the time left until the parliament vote for talks on securing support for the EFSF’s passage,” party’s spokesman Michal Lukac told Dow Jones Newswires.

Late Tuesday, SaS, one of Europe’s fiercest opponents of the EFSF–the euro zone’s temporary bailout fund–rejected a compromise offer by its partner SDKU-DS to unblock the bailout plan, scheduled for parliamentary vote Oct. 25.

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There seems to be a pretty strong campaign against the vote in Slovakia. I noticed this story (through google translate) on a TV station website lambasting Germany for its economic policies.

Slovakia certainly seems to be the most risky at the point, but it certainly isn’t the most interesting. For that you need to be watching the Italian financial soap opera which has the potential to bring down Europe:

The Italian government is struggling to fend off a financial crisis but Prime Minister Silvio Berlusconi and his Finance Finister Guilio Tremonti have descended into a personal feud that is putting not just the country, but all of Europe, at risk. If the minister were to quit, the markets would erupt in turmoil.

“He wants to drag me through the mud,” fumed Italian Prime Minister Silvio Berlusconi, referring to his Economy and Finance Minister, Giulio Tremonti. If it weren’t for this “storm” on the financial markets, he would have fired him long ago, Berlusconi added. “The sooner he leaves, the better!”

A chorus of cabinet ministers loyal to Berlusconi has chimed in to rail against Tremonti, saying it’s impossible to work with him. “He wants to get rid of me?” Tremonti shot back. “Well let him chase me off, see if he manages that!”

Italian newspapers have been giving blow-by-blow coverage of the war raging between the two political heavyweights for weeks, during which time the prime minister and his finance minister have only been talking about — not to — each other.

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In other news Germany had a very weak bond auction, Italian business confidence fell to a 20-month low , Spain and Italy extended their short selling ban on financials, the ex-ECB chief Otma Issing called for a cut in Greek debt by 50% and said that its exit from the Eurozone was inevitable, and finally Spanish housing continues to weaken putting even more pressure on the banking system:

The slump in Spain’s property market showed no sign of improving in July as mortgage approvals fell to their lowest in at least eight years, though the beleaguered economy saw some respite from a solid tourist season, official data showed last week. The number of mortgages approved in Spain’s once booming housing sector plunged 44.2% from a year earlier to 46,980 in July, the lowest since the data series began in 2003.

Analysts said the data reflected weak domestic confidence in the euro zone’s fourth-biggest economy as well as banks’ reluctance to lend.

Spain’s decade-long housing boom burst in 2008, sending tremors through the economy and marking the onset of almost three years of recession or stagnation. The country has one of the highest levels of household debt in the euro zone, adding to the government’s challenge as it tries to slash its deficit and ward off pressure from financial markets.

Another sclerotic day passes.

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