the mark is coming back.

There is slippage in Greece's debt reduction programme.

Europe’s hastily assembled bailout fund already seems to be coming apart at the seams, and that’s before Ireland has even tapped into it. Austria is refusing to contribute to the next tranche of bailout money for Greece, citing the country’s failure to meet conditions. Yesterday it emerged there is serious slippage in Greece’s deficit reduction programme.

The way things are going, the facility will fail even before its wider fault lines have been fully exposed. Europe is making things up as it goes along, and a pretty desperate job it is making of it too. The extraordinary thing to outsiders trying to analyse these events is just how poorly prepared Europe was to cope with sovereign debt crises within its midst. Indeed the no bailout clause contained in the Maastricht Treaty seemed to deny the possibility of there ever being one.

Europe had wholly failed to plan for a hurricane of this sort – bizarre when you consider how meticulous the Germans are in their economic disciplines.

As a result, the euro is left scrambling around looking for a plan. The European Financial Stability Facility plainly isn’t it, for this only seems to condemn the surplus nations to repeatedly having to bailout the deficit economies. Eventually, that’s going to be politically unacceptable. Perhaps it already is judging by Austria’s actions. And even if it were acceptable, it doesn’t work. For decades, Northern Italy has been bailing out the south with massive transfers of money. It’s done no good what so ever, with the gap between the rich north and poor south still as wide as ever. Fiscal transfers ultimately only succeed in entrenching the dependency culture.

Attempts by Germany to put in place a “resolution regime” which would allow debt restructuring for fiscally distressed nations, forcing bondholders to share in the costs, has only succeeded in making a bad situation worse. European finance ministers believed they were bring “clarity” to this intention by stating that these haircuts would only apply to debt issued after 2013, but actually this brings no relief whatsoever. Is Europe really saying it plans to honour the entire stock of existing national debt in these distressed nations, which is what the statement implies? Me thinks not, for to do so would call into question the creditworthiness even of the mighty Germany.

It’s all a terrible mess, or as Terry Smith, chief executive of Tullett Prebon, puts it, “that’s what happens when some botched repair starts to come apart in a hurricane”. Quite so.

P.S. Standby for a statement from the Irish government at 5pm gmt. Ireland is expected to dress up agreement to use the bailout facility as a banking bailout package rather than a sovereign debt bailout. Unfortunately, in Ireland the two things amount to pretty much the same thing. Has Ireland been forced to surrender her beloved ultra-low corporation tax rate in return? Europe’s major economies have wanted to axe what they see as unfair tax competition for years. They’ll never get a better chance.

P.P.S. The Irish PM’s statement has turned out to be a damp squib. Ireland has not applied for a bailout, he has reiterated, and he complains of “exaggeration” by many analysts. So we’ll just have to wait until next week then for Ireland to concede. Ireland’s finance minister is out in Brusels talking to his peers, where he plans to continue with the present charade.

Tags: Austria, European Financial Stability Facility, greece, ireland, terry smith, Tullett Prebon

http://blogs.telegraph.co.uk/finance/jeremywarner/100008678/austria-tells-greece-to-get-stuffed/

 

isn't it true that the cost of re-launching the mark is more costly than giving out those billion to greece, eventhough greece most likely will file their ch. 11?

 

They all live on bread, wine and olive oil anyways. Shouldn't be too expensive to keep them alive.

 

Of course it is. German banks own tons of other countries debt .
Going back to mark means huge losses and default for them, because German government doesn't have all that money to bail them out.
So, Bund doesn't look like a safe heaven any more, uh ?

 

John Dizard over at the FT was funnier:

 

el o' el

 

And don't forget pasta!

Seriously though, it's a huge mess. But here's the kicker: everybody says we need austerity, but as soon as some govmt starts talking about cuts ppl rally in the streets protesting and rioting. The word RESPONSIBILITY has lost all of its meaning.

 

Don´t forget Jamon !

 

I just want to confirm, the German Bund is their 10 yr. bond?

 

is that the entire article? Because the link doesn't work, you have to be a member to view it