Tags: merkel | europe | greece

Europe Prepares Next Steps After Merkel Win

Thursday, 29 Sep 2011 06:28 PM

 

Share:
A    A   |
   Email Us   |
   Print   |
   Forward Article  |
  Copy Shortlink
European leaders are turning their focus to the next steps to stem the region’s debt crisis after German lawmakers approved an expansion of the euro-area rescue fund’s firepower.

With the European Commission now expecting the overhauled 440 billion-euro ($599 billion) European Financial Stability Facility in place by mid-October, euro finance chiefs next week will discuss accelerating enactment of a permanent rescue fund that provides more capital and a tool for managing defaults.

“I’m not convinced that this bailout package is going to be remotely enough for the euro zone itself,” Wilbur Ross, the billionaire chairman of private-equity firm WL Ross & Co., said yesterday in an interview on Bloomberg Television’s “In the Loop” with Betty Liu. “I think it should start with a ‘T,’ not a ‘B,’” he said, referring to trillions instead of billions.

European officials are also studying measures that include leveraging the EFSF, said Holger Schmieding, chief economist at Joh. Berenberg Gossler & Co. in London. There may be ‘‘an orderly Greek default later this year, with a haircut on Greek debt, an immediate recapitalization of Greek banks, European guarantees for restructured Greek debt and conditional fiscal support’’ for Greece, he said.

With concern growing that Greece will be unable to avoid default, Greek Prime Minister George Papandreou will meet French President Nicolas Sarkozy today in Paris after seeing European Union President Herman Van Rompuy in Warsaw.

German Vote

In Berlin Thursday, the lower house of parliament, voting 523 in favor and 85 against, approved giving the EFSF powers to buy bonds in secondary markets, enable bank recapitalizations and offer precautionary credit lines. It raises Germany’s guarantees to 211 billion euros from 123 billion euros.

The upper house, or Bundesrat, holds a nonbinding vote on the enhanced fund today.

France, which ratified the EFSF expansion this month, hailed the German vote. The European Commission said the expanded rescue fund is set to be in place by mid-October.

Additional measures now in play include reopening the second Greek rescue agreed in July to increase the financial industry’s contribution and creating a safety net for Europe’s banks.

Merkel’s alliance of Christian Democrats and Free Democrats mustered enough votes to pass the changes on the strength of her ruling majority. That meant she didn’t depend on the opposition Social Democrats and Greens, both of which also backed the bill.

‘Some Time Yet’

‘‘In the end, the unity of the coalition was stronger than the dissent,” Peter Altmaier, parliamentary whip of Merkel’s Christian Democratic Union, told ZDF television. Even so, “we will have to deal with this issue for some time yet.”

Merkel, who heads the biggest country contributing to bailouts for Greece, Ireland and Portugal, spent weeks cajoling dissenters in her coalition to back the July 21 accord by euro- area leaders to expand the fund. Resistance was most vocal from members of the Free Democratic Party, Merkel’s junior coalition ally that has flirted with an anti-bailout stance.

Provisions inserted into the bill to satisfy Germany’s constitutional court and potential rebels will allow lawmakers to vote on all new aid requests from the fund.

Almost two years into the debt crisis centered on Greece, the U.S. is urging European governments to go further and show more urgency. Europeans haven’t responded “as effectively as they needed to,” President Barack Obama said during a roundtable discussion at the White House this week.

Europeans “are aware of our responsibility,” German Finance Minister Wolfgang Schaeuble said on Deutschlandfunk radio yesterday. “We have to take as many precautions as we can. We must ensure that Europe doesn’t become the starting point of a new, big financial and economic crisis in the world.”

© Copyright 2014 Bloomberg News. All rights reserved.

Share:
   Email Us   |
   Print   |
   Forward Article  |
  Copy Shortlink
Around the Web
Join the Newsmax Community
>> Register to share your comments with the community.
>> Login if you are already a member.
blog comments powered by Disqus
 
Email:
Retype Email:
Country
Zip Code:
 
You May Also Like
Around the Web

Newsmax, Moneynews, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, NewsmaxWorld, NewsmaxHealth, are trademarks of Newsmax Media, Inc.

MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved