In a huge non-surprise to the bond markets (but not to bullish equity buffoons), Wolfgang Schauble admits euro bail-out fund won’t halt crisis
Europe’s “big bazooka” bail-out fund is not ready and won’t stem the debt crisis that on Tuesday pounded Italy and the European Central Bank (ECB), admitted Wolfgang Schauble, Germany’s finance minister.
Mr Schauble said eurozone finance ministers, who are meeting in Brussels, could not agree on the terms of the European Financial Stability Facility (EFSF). He told Germany’s Handelsblatt that although Europe needed a fund “capable of action”, plans for the EFSF were too “intricate and complex” for investors to understand.
The finance ministers, who were meeting ahead of a full Ecofin summit today, acknowledged the €440bn (£376bn) fund would not win support to leverage it up to €1 trillion. Its capacity would be between €500bn and €700bn instead – a total that is unlikely to be big enough to rescue Spain and Italy.
However, the ministers concurred that the €8bn of international aid to Greece should be disbursed before Athens runs out of cash in two weeks. Evangelos Venizelos, Greece’s finance minister, said: “In Greece we have all the necessary conditions in order to go ahead with the next disbursement.”
Necessary Conditions Met?!
The only way “necessary conditions” can possibly have been met is if “necessary conditions” have changed.
Germany, the Netherlands, and the IMF have all insisted that all Greek coalition leaders sign off on agreement to IMF and EU demands.
However, the leader of the Greek New Democracy party still refuses to sign as noted on November 22 in Showdown in Greece; EU Gives Deadline on Signatures; Samaras Won’t Sign, Sends Letter Instead, Seeks Policy Changes.
Either the EU has blinked or I missed a “signing party”. Regardless, Greece is going to default anyway, signing party or not.
Mike “Mish” Shedlock
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