Yes, I know I have been warning that the latest European plan would most likely end in something very underwhelming because of the completely incompatible positions of the French, Germans and the ECB.. and yes I know that I warned yesterday that the evidence was mounting that any deal, if it did exist, appeared to be falling apart due to the same nationalistic politicking we have come to expect from Euro-crats.
But even though I have been expecting all of this, it doesn’t make this video from bloomberg any less of a forehead slapper.
Did you get that ? A 2 hours emergency meeting between the 4 people who would be the key architects of any possible deal and ….. NOTHING !!
With no decision, and therefore nothing much to say, Angela Merkel has now cancelled a planned speech to the Bundestag that was intended to outline parts of the “plan for the plan”:
German Chancellor Angela Merkel has canceled a planned speech to parliament in Berlin tomorrow because of a deadlock over proposals to leverage the European Financial Stability Facility to give it more firepower, three German lawmakers said.
“It’s a disappointing development but without any concrete proposal for increasing the efficiency of the fund the chancellor can’t present a complete set of proposals tomorrow,” Norbert Barthle the ranking member of Merkel’s Christian Democratic Union party on parliament’s budget committee, told reporters. Other lawmakers confirming cancelation of Merkel’s speech were opposition members Carsten Schneider and Priska Hinz.
“The French want more money from Germany than we are prepared to shoulder,” Otto Fricke, the budget spokesman for Merkel’s Free Democratic Party ally in parliament, told reporters today.
France and Germany are wrangling over the role of the European Central Bank in tackling Europe’s debt crisis. Finance ministers gather in Brussels tomorrow to set a common strategy, with European leaders scheduled to meet Oct. 23.
German lawmakers today said they will not sign off on proposals to enhance the firepower of the EFSF because of the disagreements.
So the “plan for a plan” is now slowly becoming “a plan to hopefully agree on something at some point in the future”. This weekend’s meeting was supposed to deliver a comprehensive outline of the way forward for Europe, but instead it has become a meeting to have a discussion so that another meeting can be held next Wednesday to make a decision. Obviously I am not holding my breath.
Merkel’s government spokesman Steffan Seibert has just held a press conference in which he stated that further changes to Europe’s bailout fund would need to go via the Bundestag, and I will remind our readers that there is still an eerie silence from the other AAA rated nations about what is going on, most notably Austria and the Netherlands.
But if there is one thing I have learned about the on-going European crisis it is that whenever one plan seems lost there is always a rumour of another to replace it. Here is this mornings:
European governments may unleash as much as 940 billion euros ($1.3 trillion) to fight the debt crisis by combining the temporary and planned permanent rescue funds, two people familiar with the discussions said.
Negotiations over pairing the two funds as of mid-2012 accelerated this week after efforts to leverage the temporary fund ran into European Central Bank opposition and provoked a clash between Germany and France, said the people, who declined to be identified because a decision rests with political leaders.
Rumours from unnamed sources. Now where have I heard that before ? Probably worth 50 points on the markets though!
In other news Greece’s on-going austerity protests have turned deadly, as the parliament ratifies the changes. Politicking about Portuguese austerity has begun in ernest as it becomes clearer that it is walking Greece’s path. Rates again ticked higher in the latest Spanish bond auction and ten year Italian yields passed 6% again. The proposal to gag ratings agencies gathers pace and, finally some actual really good news from Europe, ETA has declared that after 40 years it is laying down its arms.