Is the worst over in the eurozone?
With the ECB committed to unlimited purchases of eurozone bonds, the German Constitutional Court in a forgiving mood, and the Dutch electorate surprising pundits by voting for pro-euro candidates, is the worst over in the euro crisis, or, with Spain still teetering, is this just another false dawn? Tony Barber, Europe editor, and Peter Spiegel, Brussels bureau chief, join Gideon Rachman. Read more
Demonstrators outside the Spanish parliament on Sept 25 clash with police during a protest against spending cuts. Photo: Getty
The political gulf opening up between Spain’s growing separatist movement in the richest province Catalonia and the government of Mariano Rajoy, backed by King Juan Carlos and the Spanish military, has spooked the markets and provoked much debate in the press about whether Spain can survive in its present form. The country’s increasingly precarious financial position has also tilted the country further towards disaster.
In the FT:
The eurozone crisis now threatens the survival of a nation-state, writes David Gardener. The decision of Catalonia’s nationalist government to call a snap election in November – which in practice will amount to a referendum on independence – has opened the way to Catalan secession, and may give a lift to Basque separatists. “As a Spain trapped in the eurozone crisis tries to battle its way through a wrenching recession, it must now contemplate the real possibility that its plurinational state, which replaced the suffocatingly centralist Franco dictatorship with highly devolved regional government, may break up.” Read more
Welcome to our rolling coverage of the eurozone crisis. German judges have ruled in favour of the eurozone’s rescue plans – albeit with conditions, Dutch voters are going to the polls and Brussels publishes plans for eurozone-wide banking supervision. By Tom Burgis, John Aglionby and Ruona Agbroko on the London newsdesk with contributions by FT correspondents around the world. All times are BST.
16.51 That’s a wrap for our live coverage of a big day in the eurozone. The message of the past week seems to be: all hail the ECB. See ft.com for more news and analysis through the evening. We leave you with a last summary of the market mood from Ralph Atkins, the FT’s capital markets editor.
Markets have reacted positively to today’s news but it had largely been priced-in – the party took place last week. Spanish 10 year bond yields which have fallen by some 200 basis points since late July dropped a further six points. Spanish two year bonds were down 10 basis points. Shares rose initially, but the FTSE Eurofirst 300 index is closing more or less unchanged at 1108.0.
16.26 In Frankfurt, FT bureau chief and eurozone economics guru Michael Steen has been assessing the impact for the ECB of moving into the murky world of banking regulation.
By taking on oversight of eurozone bank supervision, the ECB can at best hope to prevent situations arising in which a bank needs to be bailed out and its depositors repaid. But, as people inside the ECB have themselves acknowledged, supervision is very far removed from the intellectual world of setting interest rates.
“When you deal with banks, you deal with politics. Automatically,” one senior ECB official said. “It’s very dangerous.”
The full piece is coming soon to ft.com/europe Read more
By Gideon Rachman
The European Central Bank has fired its magic bullet. By promising “unlimited” purchases of sovereign bonds, Mario Draghi, the ECB’s president, may have kept his pledge to do “whatever it takes” to save the euro. But in rescuing the currency, Mr Draghi’s magic bullet has badly wounded something even more important – democracy in Europe. Read more
Welcome to our rolling coverage of the eurozone crisis. Mario Draghi has unveiled the ECB’s bond-buying scheme. By Tom Burgis, Ben Fenton, John Aglionby and Ruona Agbroko on the newsdesk in London and Anjli Raval in New York with contributions by FT correspondents around the world. All times are BST.
21.40 As we close up today’s blog, here is a last US markets round-up from Arash Massoudi in New York:
What a day for equities on Wall Street. US stocks jumped to their highest closing level since January 2008 as investors piled into risk assets.
The benchmark S&P 500 rose 2.04 per cent to finish at 1,432.12. All ten broad sector groups on the index moved more than 1 per cent higher. Financials were among the day’s top performers with bulge bracket banks enjoying hefty gains. Bank of America rose 5 per cent to $8.35, Citigroup climbed 4.5 per cent to $31.12 and JPMorgan Chase gained 4.3 per cent to $38.69. Broadly, the S&P 500 is up 13.9 per cent since the start of the year.
The Nasdaq closed at its highest level since December 2000.
José Manuel Barroso (R), who is set to unveil plans for a "banking union" on September 12, shown here in talks with German Chancellor Angela Merkel in June.
In times of crisis, a fast-forward button can be pressed on decisions that would usually take years of discussion and planning. So it is with the creation of a European ‘banking union’, which analysts at the Bruegel thinktank describe as an endeavour “in some respects no less ambitious and complex than the creation of monetary union itself”. The aim is to brace eurozone banks against future shocks by bringing them under a common regulatory and supervisory structure, introducing common deposit insurance and a shared system for crisis resolution. In June, José Manuel Barroso, president of the European Commission, told the FT he’d like to enact a banking union as soon as 2013. But is that really feasible? And what hurdles stand in the way? Read more
These are the pieces that interested and amused us today: Read more
By Gideon Rachman
For the past fortnight, Britain has been taking a powerful mind-altering substance called the Olympics. Now, as the drug is suddenly withdrawn, can the upbeat national mood last – or is the British patient doomed to slip back into despondency? Read more
Youngsters shout slogans during a demonstration in Madrid on March 29, 2012 on a national strike day. (DANI POZO/AFP/Getty Images)
FT reporters have written about the issue of youth unemployment around the world as part of our Left Behind series this summer. They covered the fears and hopes of young people struggling to find jobs amid the worst economic crisis since World War II – and the governments’ responses.
The US and China: Prospects of the world’s largest economies
The eurozone has dominated headlines for months, but what of the other key poles of the world economy, China and the United States? Growth has been slowing in China for months, and the US is also struggling. James Politi in Washington and Jamil Anderlini in Beijing join Gideon Rachman to discuss the prospects of the world’s two largest economies. Read more