Eurozone watch

[campbell]

A real good feeling

http://www.economist.com/blogs/charl...w/te/bl/parted

In an effort to stabilise the euro zone, France, Germany and 21 other countries have decided to draft their own treaty to impose more central control over national budgets. Britain and three others have decided to stay out. In the coming weeks, Britain may find itself even more isolated. Sweden, the Czech Republic and Hungary want time to consult their parliaments and political parties before deciding on whether to join the new union-within-the-union.

So two decades to the day after the Maastricht Treaty was concluded, launching the process towards the single European currency, the EU's tectonic plates have slipped momentously along same the fault line that has always divided it—the English Channel.

Confronted by the financial crisis, the euro zone is having to integrate more deeply, with a consequent loss of national sovereignty to the EU (or some other central co-ordinating body); Britain, which had secured a formal opt-out from the euro, has decided to let them go their way.


Whether the agreement does anything to stabilise the euro is moot. The agreement is heavily tilted towards budget discipline and austerity. It does little to generate money in the short term to arrest the run on sovereigns, nor does it provide a longer-term perspective of jointly-issued bonds. Much will depend on how the European Central Bank responds in the coming days and weeks.

http://blogs.telegraph.co.uk/finance...m-flam-treaty/

What remarkable petulance and stupidity.

The leaders of France and Germany have more or less bulldozed Britain out of the European Union for the sake of a treaty that offers absolutely no solution to the crisis at hand, or indeed any future crisis. It is EU institutional chair shuffling at its worst, with venom for good measure.

It is risky to reach instant conclusions on a fast-moving story but it looks as if the EU may soon be reduced to a shell, with a new union forming among the core.
Much has been said about whether David Cameron handled this well or badly. I leave that debate to my colleagues. What strikes me as a former EU correspondent is how threatening this is to the EU Project itself.

A country – and a large one – may start to disengage for the first time. The aura of historical inevitability that has swept Europe towards ever closer union for half a century has been punctured. Yes, Croatia will soon join, as Sarkozy chirped triumphantly, but that is not quite the same thing (no offence meant to the South Slavs).

The UK should pat itself on the back for dodging the euro bullet.

[campbell]

http://www.bbc.co.uk/news/business-16122367

Some of Europe's top insurance companies have been warned their credit rating could be downgraded as a result of the European financial crisis.

The warning comes from the rating agency Standard and Poor's, which earlier this week warned most eurozone countries they could be downgraded

Allianz, Aviva, Axa, Generali and Mapfre were among 15 firms warned.
....
The full list of insurers also names Caisse Centrale de Reassurance, CNP Group, Irish Public Bodies Mutual Insurances, Millenniumbcp-Ageas Group, Nacional de Reaseguros, Pozavarovalnica Sava, RSA Insurance Ireland, Societa Cattolica di Assicurazione, Triglav Group and Unipol Group.

Among the countries warned on Monday were Germany, the Netherlands, Finland, Luxembourg and Austria, who were told their rating could be marked down one notch.

France, the eurozone's second-largest economy, was warned it could be given a two-notch cut downgrade.

S&P said it would complete a review of the 15 countries' ratings "as soon as possible" after this week's EU summit.

[campbell]

http://www.telegraph.co.uk/finance/f...o-notches.html

The eurozone’s third- and fourth-biggest economies were warned by Fitch of a “near-term” downgrade, alongside Ireland, Belgium, Slovenia and Cyprus.
In a further blow, Belgium separately saw its credit rating downgraded two notches, to Aa3, by another leading agency, Moody’s.
It cited the “sustained deterioration” in funding conditions for eurozone countries with relatively high levels of public debt, like Belgium, and new risks stemming from the country's troubled banking sector.
The downgrade and warnings, delivered after the markets closed last night, came as Spain said its debts had soared; talks with Greece’s private bondholders stalled; and Hungary broke off talks with the International Monetary Fund (IMF).
Pitching itself firmly against Germany, the rating agency warned that the European Central Bank (ECB) needed to give a "more active and explicit commitment" to prevent "self-fulfilling liquidity crises" ripping through the eurozone. The ECB's support for eurozone banks was praised but Fitch said the central bank's "continued reluctance to countenance a similar degree of support to its sovereign shareholders" was undermining the efforts to create a firewall to stem the crisis.

And, for a little levity:
http://www.captaineuro.com/

[ElDucky]

Central Bank will print 3 trillion euros sometime in the next 6 months.

[MathGeek92]

yup. count on it

outright default is non-starter due to political and social ramifications...

Originally Posted by ElDucky

Central Bank will print 3 trillion euros sometime in the next 6 months.

I'd argue that simply printing Euros is strictly prohibited by the Treaty of Lisbon, but that presumes the rule of law is actually followed. That said, if the ECB turns on the printing press the Euro will likely go straight into the toilet and it will suddenly be a race between all the other countries to devalue their currencies.

At that point, the choice of what to be invested in will probably be the least of anyone's worries.

[limabeanactuary]

This is not exactly Eurozone, but it is somewhat related:

http://www.zerohedge.com/news/psssst...s-950-debt-gdp



ok, what exactly is in that huge green bar?

[tommie frazier]

if I'm reading it right, it's "financial".

if it means anything, it is the color that apparently will kill the UK.

[limabeanactuary]

yes, I understand it's financial debt.

I'm asking =what= financial debt it is. And I'd also like to know who is holding it.

[Colymbosathon ecplecticos]

Originally Posted by tommie frazier

if I'm reading it right, it's "financial".

if it means anything, it is the colo[u]r that apparently will kill the UK.

IFYP

Originally Posted by limabeanactuary

yes, I understand it's financial debt.

I'm asking =what= financial debt it is. And I'd also like to know who is holding it.

I sell a currency swap and hedge it by borrowing in one currency and lending in another. That's an example of financial debt.