By Gideon Rachman
European leaders must surely know that they are taking a big risk with Cyprus. The danger is obvious. Now that everybody with money in Cypriot banks is being forced to take a hit, nervous depositors elsewhere in Europe might notice that a dangerous precedent has been set. Rather than run even a small risk of an unwanted financial “haircut” in the future, the customers of Greek, Spanish, Portuguese or Italian banks might choose to get their money out now. If that starts to happen, the euro crisis will be back on again – with a vengeance.
By Gideon Rachman
Some months ago, I was discussing the euro crisis with a high-ranking US diplomat. “It’s back to the 1930s, isn’t it?” said my companion with a mixture of gloom and relish. “The extremists are on the rise.”
By Gideon Rachman
A rare beast has reappeared in Europe. In recent years, there were no confirmed sightings. But in the past few weeks, this shy animal – known as “good news” – has been spotted in various European locations.
Friday’s events from the World Economic Forum feature an address by Mario Draghi, president of the European Central Bank, and sessions looking at the challenges faced by, and presented by, the fast-changing Arab world. Reports from FT writers in Davos and by Ben Fenton, Lina Saigol and Lindsay Whipp in London
17.03: The Davos Live Blog is closing down now but for more reading and insight on today’s events, please visit the FT’s in depth page on the World Economic Forum.
16.41: Gideon Rachman, titular proprietor of this blog, has written his surmise from the earlier session on Syria.
16.16: Asked by the Amercian moderator of his panel session about corruption and banking regulation, Nigeria’s central bank governor Sanusi displays a little frustration:
He said: “We are the only country which has taken people out of banks and put them in jail. No bankers in your countries have gone to jail.”
16.12: Martin Wolf has recorded his view on the politics and economics at play in a “low-intensity” Davos this year:
There was a big kerfuffle in October when the IMF made a point of saying that it (along with a bunch of other forecasters) had underestimated the effect of fiscal tightening on European economic growth over the past couple of years, with obvious implications for the troika’s austerity programmes for the likes of Ireland, Greece and Spain.
The admission got some predictable pushback from troika members who have drunk deep from the austerian well. It was also questioned by my colleague Chris Giles, who pointed out that the results were highly sensitive to the inclusion in the sample of outlier countries – especially Germany (which, despite its frugal prescription for others, has itself followed expansionary fiscal policy and enjoyed good growth) and Greece (the opposite) – and possibly the exclusion of the Baltic states, which followed aggressive fiscal tightening to better effect than Greece. Read more
By Gideon Rachman
Everybody agrees that economic and political power is moving east. Barack Obama has constructed a whole new foreign policy around this theory – the “pivot to Asia”. But, as I assemble my annual list of the five most important events of the year, it is striking how events in Europe and the Middle East still dominate.
Welcome to our live coverage of the eurozone crisis. We’ll bring you all the developments. By Tom Burgis and Ben Fenton in London with contributions from FT correspondents across the world. All times are GMT.
17.37: As the EU’s political leaders get down to talks, we are closing down the live blog for today, but it will be up again bright and early tomorrow to pick up on whatever is decided overnight. Meanwhile, elsewhere on FT.com you’ll be able to find coverage of the summit kept fresh by our sleep-deprived Brussels team.
17.29 More bleak news for the UK’s Triple A credit rating, via FT markets editor Chris Adams:
17.24 More twists and turns in this tale of what said what to whom about the Italian elections at the centre-right EPP’s pre-summit meeting today (see 15.49 and 17.06).
Antonio Tajani, the Italian EU commissioner and a Berlusconi ally, is quoted by Italian news agency Adnkronos as saying that none of the leaders of the EPP “expressly asked Monti to be a candidate”.
“Everyone spoke well of Monti but no one wants to interfere.”
What’s holding up a European banking union?
When European leaders resolved to finally solve the eurozone crisis, they swore that that a banking union would be a crucial part of the solution and that agreement would be in place by the end of this year. But with the latest negotiations bogged down, what’s happened and does it pose a threat to financial stability in Europe? Patrick Jenkins, banking editor, and Alex Barker, Brussels correspondent, join Gideon Rachman to discuss.
With friends like these…. Jean-Claude Juncker and Christine Lagarde. (AFP)
It’s not as if the troika of eurozone rescue lenders never falls out, but usually it takes a not-in-front-of-the-children attitude to airing its rows. A refreshing change on Monday night, as my colleagues Peter Spiegel and Josh Chaffin report, when the eurogroup summit, while not actually deciding anything substantive, made sure it would stand out from the dozens of other such gatherings by hosting a very public argument between the eurogroup’s Jean-Claude “We all know what to do, we just don’t know how to get re-elected after we’ve done it” Juncker and the IMF’s Christine Lagarde.
The actual substance of the spat looks laughably trivial. It’s about whether Greece hits its 120 per cent of GDP debt target in 2020 or in 2022, which, given the huge uncertainties in forecasting debt dynamics, is about as precise as a Florida election count. The 120 per cent target is itself pretty arbitrary, apparently based on what seems to be sustainable in Italy, which is a very different country with a more flexible economy and captive domestic investor base for government bonds. Read more