Daily Archives: July 3, 2012

IMF headquarters in Washington.  Saul Loeb/AFP/Getty Images

Saul Loeb/AFP/Getty Images

Continued discussion this week on winners and losers at last week’s EU summit, in particular eurozone guru Paul de Grauwe on why the ESM being able to buy sovereign bonds outright (which it already could, btw) is likely to do more harm than good for the likes of Italy and Spain. Using it to recap banks would be more useful, but it will take a while before Germany is satisfied that conditions are in place to take that route. (More evidence, as de Grauwe points out, that the endless bureaucratic EFSF/ESM dance is all just a way of trying to get other agencies to do what the ECB should be doing.)

Where does all this leave the rest of the world - and its favoured tool, the IMF - in its attempts to help the eurozone out of its crisis? The answer: struggling for relevance. The fund isn’t allowed to recapitalise banks directly or buy sovereign bonds in secondary markets; the only way it can use its money is by lending to governments.  Read more

Here are some of the articles that have grabbed our attention from today’s FT and elsewhere:


Denis Doyle/Getty Images

Denis Doyle/Getty Images

Italy stands on the front line of the eurozone’s battle for survival – but you’d never guess it from the latest available data on Italian public finances.

The cumulative budget deficit fell in the first half of this year to €29.1bn from €43.9bn in the same period of 2011, according to the finance ministry. If you exclude its debt servicing costs, Italy is running a central government surplus of more than 3 per cent of gross domestic product. This is fiscal virtue unmatched elsewhere in southern Europe – or in much of northern Europe, for that matter. Read more

By Gideon Rachman

“Life outside the EU holds no terror.” With that single phrase, Liam Fox has placed himself at the head of the large faction within the Conservative party that wants Britain to detach itself from the EU. As the euro crisis intensifies that faction will grow in size, both inside the Tory party and within Britain as a whole. Read more