Eurozone governments: Are “the markets” refusing to lend to you? Turn to “the people” instead.
That is in essence what Belgium is proposing to do, with an appeal to retail investors (i.e. you) to buy the sovereign bonds it is struggling to sell to institutional investors (i.e. Goldman Sachs).
Yves Leterme, prime minister, plugged the bonds-for-the-people in the local press on Thursday, arguing they were a particularly good deal now that Belgium’s institutional muddle has helped send yields to attractive levels.
For those who have not been following Belgian politics in the past 577 days, the country has been run by a caretaker administration since April 2010 while its political class tries to cobble together a new government. Read more
Image by Getty.
One week, two set-backs for Belgium. First markets started attacking its debt, then the putative prime minister throws in the towel in his protracted efforts to form a new government, citing lack of common ground between the main political parties over the 2012 budget. After 529 days of negotiations, is it time for a technocratic government?
It’s probably a bit soon. Elio Di Rupo, the Socialist leader, may have offered his resignation to King Albert II, but it has yet to be accepted. It would not be the first time that Di Rupo has “resigned”, only to be begged to stay on as new, unexpected consensus is found. The King, at his countryside estate recovering from a recent nose operation, is consulting party leaders this week and will advise on Di Rupo’s fate later this week. A few have already reaffirmed their faith in Di Rupo.
Two factors suggest a government is closer at hand than may at first seem the case. Read more
For the unfortunate diplomats locked in the Justus Lipsius council building all of Friday and into Saturday morning, the European Union’s 2012 budget negotiations were an arduous affair. Upon emerging, one groggy diplomat lamented “an evening I can never get back.”
But to the union at large, the remarkable thing about the talks was how easily they went down.
For those who missed the news early Saturday morning, representatives from the EU’s 27 member states, the European parliament and the European commission agreed on a 2.02 per cent increase in next year’s budget, bringing it to €129bn.
That was well below the 5.23 per cent sought by MEPs, and the 4.9 per cent recommended by the commission. Read more
One week, two policy retreats. Things are not going too well at the moment for Michel Barnier, Europe’s top financial regulator.
First he came unstuck on his credit rating agency reforms, as his fellow European commissioners mounted an revolt over proposed powers to ban sovereign ratings on bailout countries. The result was a last-minute climbdown.
Then, just two days later, some of the same Commission rebels were expressing strong reservations about a separate proposal to break the grip of the Big Four accounting firms. This time around Barnier is offering up his concessions early - at least one of the most controversial measures in the audit proposals will likely be dropped. Read more
German chancellor Angela Merkel during a press conference Thursday
Our friends and rivals over at The Daily Telegraph have gotten their hands on an interesting document from the German government detailing its proposals for EU treaty change, and have helpfully posted it online (with an English translation by the Open Europe think thank).
Although the Telegraph focuses on its implications for Britain, there is a significant amount of detail on how Berlin would like to change eurozone economic governance, including yet another stab at enshrining bondholder “haircuts” in the EU treaties.
For those who haven’t followed the debate closely, there is now a closed-door fight going on about whether Greece really will be the only country that sees its bondholders pushed into losses – as the eurozone’s leaders have repeatedly insisted in their summit conclusions – or whether the bloc’s new €500bn rescue fund, which could come into place as early as next year, should allow for organised defaults.
Although almost all EU institutions – including the European Commission and European Central Bank – want to make explicit Greece was a one-off, the German paper makes clear they want to keep the door open. Read more
Monti, at a press conference in Rome Monday
In today’s newspaper, we have a piece on presumptive Italian prime minister Mario Monti as viewed from Brussels, with special attention to comments and writings he’s made as one of the most prominent members of the Brussels think tank circuit.
As we pointed out in the story, his views on what ails Europe have been there for all to see for some time, but Brussels Blog wanted to draw specific attention to a symposium he spoke at just a few weeks ago sponsored by the Polish presidency and the Bureau of European Policy Advisors, the European Commission’s in-house think tank.
At the conference, Monti gives a pretty thorough analysis of what ails Italy and the need for cross-party political pain. But he also goes out of his way to lavish praise on the US Congress’s so-called “super committee” that is currently just a week away from a self-imposed deadline to come up with a bipartisan budget-overhaul plan.
Because we did not have enough space in the newspaper to delve into Monti’s comments more fully, some extended excerpts after the jump. Read more
EU commissioner Michel Barnier
On what has been a bleak day for credit rating agencies after S&P’s faux French downgrade, here is a tiny bit of good news for the industry.
Michel Barnier, the commissioner overseeing European financial regulation, is on Tuesday unveiling plans to overhaul credit rating agencies, which take an unforgiving approach to many current industry practices.
While the main principles of the draft proposals will remain – powers to suspend ratings on stricken sovereigns, mandatory rotation of rating agencies, an approval process for their analysis methods – there are likely to be some last minute tweaks. Read more
Silvio Berlusconi, the Italian prime minister, at last week's G20 summit in Cannes
At the European Commission’s regular mid-day press briefing today, Amadeu Altafaj-Tardio, the spokesman for economic issues, said the Commission’s Italian monitoring team is expected to arrive this week. After agreement Friday in Cannes, the International Monetary Fund will be sending its own team at the end of the month. Read more