Germany

Krugman v. Schäuble

August 26, 2011 10:47 am by Peter Spiegel

German finance minister Wolfgang Schäuble

Influential Nobel Prize-winning economist Paul Krugman has picked yet another fight with eurozone politicians, this time with Germany’s Wolfgang Schäuble.

On his New York Times blog, Krugman takes issue with the German finance minister’s claim at a panel discussion in Frankfurt on Thursday that “economists worldwide” agree the 2008 eurozone crisis was triggered by excessive public debt “everywhere in the world”.

Krugman says excessive public debt actually triggered a crisis in only one country, Greece. Ireland and Spain’s problems only become a public debt crisis after private-sector bank debt was moved onto the government books through bail-outs. Similarly, until the recent standoff over the US debt ceiling, American problems have originated in the financial sector. Read more

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Posted in EU, Fiscal policy, Further reading |

Another viewer’s guide to the Greek crisis

June 16, 2011 9:42 am by Peter Spiegel

Greek riot police confront protestors in front of parliament in Athens on Wednesday

Just as one Greek crisis appears to be dissipating, another one flares up that risks pushing Athens into default in a matter of weeks. For those struggling to follow along, here’s another one of our quick primers – and a guide for what to watch for in the coming days.

For much of the last month, officials have been fretting that unless they can piece together a new €120bn bail-out for Greece by next week, Athens would run out of money. The first default by an advanced economy in 60 years would ensue, potentially wreaking havoc across the eurozone.

The reason behind the fear was a complicated domino effect that started with the International Monetary Fund: the IMF was going to withhold its €3.3bn in aid due this month unless the European Union could ensure Greece could pay its bills for another year. Greece, however, is going to be unable to pay its bills next year without a new bail-out. Read more

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Posted in EU, Euro, Fiscal policy |

Greece and S&P: Is default really a certainty?

June 14, 2011 9:47 am by Peter Spiegel

Monday night, the work of EU finance ministers meeting in Brussels today to unravel the Greek debt crisis got a whole lot harder: Standard & Poor’s downgraded Greek sovereign bonds to just a few notches above default.

If ministers were hoping to “re-purpose” Greek debt in a way that would prevent the eurozone’s first-ever default, S&P is basically telling them: Good luck; we don’t believe you can do it.

But a closer reading of the S&P report may give the eurozone leaders an out: the credit rating agency seems to have ignored the possibility that the new Greek bail-out will opt for a roll-over of Greek bonds, a plan backed by the European Central Bank, instead of a debt swap, which is supported by Germany. Read more

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Posted in EU, Fiscal policy |

A viewer’s guide to the Greek crisis

June 3, 2011 10:22 am by Peter Spiegel

A decision about how to keep Greece solvent is coming to a head, and for those keeping tabs, here’s a quick primer on what to watch for in the next few days. Read more

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Posted in Fiscal policy |

What did Irish bail-out bond auction really tell us?

January 27, 2011 5:04 pm by Peter Spiegel

Following the hugely successful auction of Irish bail-out bonds Tuesday, Klaus Regling, head of the eurozone agency that raised the cash, said the offering “confirms confidence in the strategy adopted to restore financial stability in the euro area”. But is that really what investors were telling us?

To be sure, the first-ever use of the eurozone’s €440bn rescue fund, the European Financial Stability Facility, was an unmitigated victory for Regling and his nascent organisation – though, let’s remember, that the agency which actually did the heavy lifting was Germany’s debt agency, which is rather experienced in such auctions.

And investors would not have flocked to the issue – some €44.5bn in orders came in for a €5bn offering – if the markets thought the euro was about to implode.

But as my London-based colleague and sovereign debt savant David Oakley quoted one fund manager saying: “We are buyers of this bond because it is very safe and offers extra yield over German Bunds.” Which seems to be the prime motivator here. Read more

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Posted in Economic governance, Euro |

France and Germany vs. Bulgaria and Romania

December 22, 2010 2:40 pm by Peter Spiegel

In today’s paper, fellow Brussels Blogger Stanley Pignal has a nice scoop about a letter France and Germany sent to European Union officials announcing their formal objections to including Bulgaria and Romania in the Schengen area, the visa-free travel zone that most EU members are part of.

Traian Basescu, the Romanian president, has already responded this morning by calling the letter a “discriminatory act against Romania,” and vowing to fight the move.

Because the issue could get even hotter, especially since the incoming Hungarian presidency had made Bulgarian and Romanian Schengen membership such a priority, we thought we should post the letter here, with some annotations of our own. Read more

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Posted in Enlargement, EU |

EU summit: Mr Cameron picks his fights

October 28, 2010 7:56 pm by Joshua Chaffin

Twenty-six European leaders turned up for a dinner in Brussels this evening with one burning question to discuss: Whether or not to change the European Union treaties to accommodate Germany’s demands for a new permanent bailout fund?

But one European leader burst in and insisted on talking about something else. That would be David Cameron, the UK prime minister, and his obsession was the European budget. Read more

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Posted in Economic governance, EU, EU Commission, EU Parliament, Euro, Fiscal policy, Foreign policy |

EU summit: Wavering Merkel ally?

October 28, 2010 12:47 pm by Peter Spiegel

The opening feature of any EU summit is the gathering of heads of government at their partisan caucuses. These days none is more important than the European People’s Party, the right-wing EU coalition that includes Angela Merkel, Nicolas Sarkozy and Silvio Berlusconi. Read more

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Posted in Economic governance, Economic growth |

EU summit: Prime ministers start taking sides on treaty change

October 28, 2010 10:19 am by Peter Spiegel

The call by Angela Merkel to reopen the European Union’s treaties in a major address to the Bundestag is already generating reaction from heads of government in other member states as they begin descending on Brussels for a two-day summit.

Ms Merkel worked the phones the day before the summit, calling several of her counterparts in an attempt to shore up support – a sign of just how precarious her position is and her need to come out of the summit with a victory following intense criticism at home for her political deal-making to win over reluctant allies. Read more

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Posted in Economic governance, Euro, Fiscal policy |

Germany puts European parliament first

July 8, 2010 2:43 pm by Quentin Peel

Christian Wulff, Germany’s new federal president, has not been idle. He had barely wiped his feet on the doormat in Schloss Bellevue, his splendid new Berlin residence, before setting off on a foreign trip.

While his job is without power, it carries lots of prestige. Indeed, the role is more about symbolism than substance. But the symbolism matters.

His first stop on Wednesday was in Strasbourg to meet Jerzy Buzek, European Parliament president. Second stop was Paris, for a chat with Nicolas Sarkozy at the Elysée palace. And third stop, on Thursday, was Brussels, where he had lined up Herman Van Rompuy, president of the European Council, José Manuel Barroso, president of the European Commission, and Anders Fogh Rasmussen, Nato secretary-general.

It was all about pouring oil on troubled waters, to be sure. Germany’s relationship to the European Union has seldom caused so much anxiety amongst its neighbours, since Berlin started to bang the drum with a vengeance about the need for fiscal discipline – first in Greece, and now in the rest of the eurozone. Read more

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Posted in Economic governance, EU Commission, EU Parliament |
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