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Old 11-27-2011, 12:36 PM   #1
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Germany, France plan quick new Stability Pact

This might be the QE the market has been asking for...

http://www.reuters.com/article/2011/...7AQ00F20111127

Germany, France plan quick new Stability Pact: report

Quote :
(Reuters) - France and Germany are planning a quick new pact on budget discipline that might persuade the European Central Bank to ramp up its government bond purchases, Welt am Sonntag reported on Sunday.

Echoing a Reuters report on Friday from Brussels, the Sunday newspaper said the French and German leaders were prepared to back a deal with other euro countries that might induce the ECB to intervene more forcefully to calm the euro debt crisis.

The newspaper report quoted German government sources as saying that the crisis fighting plan could possibly be announced by German Chancellor Angela Merkel and French President Nicolas Sarkozy in the coming week.

In an advance release before publication, Welt am Sonntag said that because it would take too long to change existing European Union treaties, euro zone countries should just agree among themselves on a new Stability Pact to enforce budget discipline - possibly implemented at the start of 2012.

It could be similar to the Schengen Agreement which applies to EU countries that choose to take part and enables their citizens to enjoy uninhibited cross border travel. Among the countries in the Stability Pact, there would be a treaty spelling out strict deficit rules and control rights for national budgets.

The European Central Bank should also emerge more as a crisis fighter in the euro zone, Welt am Sonntag wrote, saying that while governments cannot tell the independent ECB what to do, the expectations are clear.

"Based upon these measures, there should be a majority within the ECB for a stronger intervention in capital markets," Welt am Sonntag said. It quotes a central banker as saying: "If the politicians can agree to a comprehensive step, the ECB will jump in and help."

The ECB, which cannot directly finance governments, has been buying Italian and Spanish bonds on the open market since August to try to keep down borrowing costs for the euro zone's third and fourth largest economies.

Yields on Italian and Spanish debt have nonetheless climbed in recent weeks, despite the ECB intervention and the appointment of a new technocrat government in Rome and the election of the conservative Popular Party in Madrid.

In Brussels on Friday, euro zone officials said a push by euro zone countries toward very close fiscal integration could give the ECB the necessary room for maneuver to scale up euro zone bond purchases and stabilize markets.

France's Journal du Dimanche newspaper said reforms to Europe's economic governance would be the focus of a speech which Sarkozy will deliver in the Mediterranean port of Toulon on Thursday.

"The European Commission could take on supra-national powers," said one French presidency source, according to the newspaper, saying that Brussels would supervise the decisions of countries at risk of default, provided they request this.

"National parliaments will retain the initiative over the (policy) efforts to be made," one French negotiator told the paper.

The European Commission, the EU executive arm, put forward proposals on Wednesday to grant it intrusive powers of approval of euro zone budgets before they are submitted to national parliaments, which, if approved, would effectively mean ceding some national sovereignty over budgets.
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Old 11-27-2011, 01:11 PM   #2
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Quote :
"The European Commission could take on supra-national powers,"


How sad that the politicians will sell out their countries to the banking cabal. Do the European people have the stones to stand up for themselves? Does anyone make decisions with a long term view of the future any more?
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Old 11-27-2011, 01:57 PM   #3
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What is the difference between the UK and the US on the one hand and the EU on the other hand? In terms of goverment debt, there is only the printing press of their central banks. As soon as the ECB starts buying unlimited amounts of bonds like the FED and the BOE, the Euro crisis will dissapear from the news for a while.
Once German politicians realize that, they will dishonour their sound monetary traditions and welcome the ECBs QE.
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Old 11-27-2011, 05:32 PM   #4
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I happen to be short the euro over the weekend. Ouch?
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Old 11-27-2011, 05:47 PM   #5
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Originally Posted by DCFusor View Post:
I happen to be short the euro over the weekend. Ouch?
We´ll see. early quotes indicate a mild recovery of the EUR: http://www.zerohedge.com/news/latest...30-eurusd-pips

I´m sure there´ll be plenty of volatility allowing you to close your position with profits.
Usually EUR/USD crashes at the European opening bell (3am ET) and before the US opening bell (arround 8:30-9 am ET).
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Old 11-27-2011, 07:44 PM   #6
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Christmas is a European holiday too... I don't see the sales reports for EU that we see plastered on our TV's like here in the US. But, I'm pretty sure a big weekend of sales on both sides of the pond would make some movements in the EUR/USD, amirite?
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Old 11-28-2011, 08:55 AM   #7
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A counterpoint view from AEP:
Originally Posted by Ambrose Evans-Pritchard :
...
Even if EU leaders could agree on fiscal union and joint debt issuance -- which they can't -- such long-range changes cannot solve the immediate crisis at hand. The push for treaty changes has become a vast distraction.

Unless Germany agrees to the full mobilization of the European Central Bank very fast, the eurozone will spiral out of control. As The Economist put it, "The risk that the currency disintegrates within weeks is alarmingly high."
...
http://www.telegraph.co.uk/finance/c...-disaster.html
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Old 11-28-2011, 09:22 AM   #8
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IMHO...

I think we've reached the point where they are going to throw the kitchen sink at this. IMF, ECB, FED... We all knew it was going to happen, it was just a matter of when conditions would be right for intervention. Italian yields over 8% probably qualifies.
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Old 11-28-2011, 09:25 AM   #9
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Old 11-28-2011, 01:39 PM   #10
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Old 11-28-2011, 09:22 PM   #11
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Originally Posted by DCFusor View Post:
I happen to be short the euro over the weekend. Ouch?
If you hold on for a little while, your position will be fine
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Old 11-28-2011, 09:29 PM   #12
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I did, it was already pretty in the green, so I just held today - it was going my way all day again.
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