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Thread: EU to Set Up Fund to Prevent Spread of Greek Crisis

  1. #11
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    Re: EU to Set Up Fund to Prevent Spread of Greek Crisis

    Look -- some European economies are going through a tough time. This is certainly the first major crisis the Eurozone is facing, but I suspect they will come through it -- though it will be painful and could well take a few years.

    Perhaps they will also realize what Americans are beginning to realize. Unless China and Japan start playing according to the rules and principle of both free and fair trade, the Western economies will continue to be bludgeoned by the East Asian economies who still practice neo-mercantilist policies (mostly Japan, South Korea and China -- Taiwan to a lesser extent though it has opened up more than the other three have).
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    Re: EU to Set Up Fund to Prevent Spread of Greek Crisis

    Quote Originally Posted by Jetboogieman View Post
    what I think it will do is is create deep divisions
    absolutely

    FT.com / Brussels - Eurozone leaders vow to tighten fiscal discipline

    One obstacle to faster European action lies in the different perspectives of France and Germany. Both countries agree on the immediate need for new pan-European market supervisory authorities and are keen to impose more controls on credit rating agencies.

    But whereas Paris sees the crisis as providing a compelling case for closer economic and fiscal policy integration, Berlin is wary of proposals that it suspects might force it to prop up other countries’ economies, undermine Germany’s competitiveness and compromise the ECB’s legally enshrined independence from political pressure.
    Greece erupts as men from IMF prepare to wield axe - Times Online

    Some young Greeks prefer to blame their elders for the mountain of debt that has resulted in Greece, like a wayward child, being placed under the tutelage of the men from the IMF.

    “I cannot help but blame my parents a little for what’s happened,” said Achilles Zacharoulis, a 36-year-old cardiologist. “They were here all that time,” he added, referring to the past three decades of mismanagement and fiscal insanity. “But what did they do to stop it?”

    Vaggelis Gettos, 24, is just as alarmed at the burden being heaped on the young by austerity measures expected to be announced today, and has pledged to resist them in more protests this week against what he sees as a plot to impoverish Greece.

    “We will live much worse than our parents,” he said. “Why should we be made to pay for their mistakes?”

    The question of who was to blame and who should pay for the greatest crisis to afflict the single currency was a subject of heated debate, particularly after a leading credit rating agency put the cradle of civilisation in the same category as Azerbaijan by reducing its government bonds to “junk” status.

    Economists regard the bloated civil service with its jobs for life and generous pensions as a cancer consuming the country’s resources. The older generation, the experts grimly concur, turned the state into a giant cash machine to be plundered at will.

    Even greater social unrest is expected as resentment simmers among poorer families at being told to tighten their belts when wealthy Greeks can protect their fortunes by moving their money abroad, some of it into property bargains in London.

    As if in the path of an advancing army, Greeks are hiding their money. In the end, Stefanos, the retired captain, opted like his friends for a safety deposit box. The super rich, for their part, have shifted an estimated €11 billion to Cyprus and other havens since the start of the year, according to Konstantinos Michalos, president of the Athens chamber of commerce.
    finally, for now:

    AFP: Merkel blasts 'treacherous' banks in Greek crisis

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    Re: EU to Set Up Fund to Prevent Spread of Greek Crisis

    The latest news from the European Union...

    From Bloomberg.com:

    European Union finance ministers moved toward agreement on an unprecedented loan package worth at least $645 billion to prevent Greece’s fiscal woes from triggering a broader sovereign-debt crisis and shattering confidence in the euro...

    Jolted into action by last week’s slide in the currency to a 14-month low and soaring bond yields in Portugal and Spain, the 16 euro governments sketched out plans to make 440 billion euros ($570 billion) available, with 60 billion euros more from the EU’s budget, according to three officials at the talks in Brussels. An additional, unspecified sum may come from the International Monetary Fund, the officials said.
    EU Preps $645 Billion Fund to Fight ?Wolfpack,? Debt Crisis - Bloomberg.com

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    Re: EU to Set Up Fund to Prevent Spread of Greek Crisis

    Update from Bloomberg.com:

    European finance ministers put together an unprecedented loan package that may be worth 720 billion euros ($928 billion) for debt-swamped governments in a bid to restore faith in the euro and prevent Greece’s fiscal woes from unleashing a global crisis...

    The European Central Bank will announce “intervention” in financial markets, Luxembourg Finance Minister Luc Frieden told reporters, without giving further details.
    EU Crafts $928 Billion Show of Force to Halt Crisis (Update1) - Bloomberg.com

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    Re: EU to Set Up Fund to Prevent Spread of Greek Crisis

    For those who are interested, the European Union's press statement describing the extraordinary measures undertaken to contribute to financial stability in Europe can be found here.

    For those who have difficulty accessing the site from clicking on the link, one can copy and paste the following URL into the address bar to access the site "http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/ecofin/114324.pdf"
    Last edited by donsutherland1; 05-10-10 at 09:23 AM.

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    Re: EU to Set Up Fund to Prevent Spread of Greek Crisis

    Quote Originally Posted by donsutherland1 View Post
    The EU agreed to set up a foreign exchange stabilization fund to help defend the Euro on foreign exchange markets. While it remains unclear whether speculation, more than uncertainty, had been driving the Euro lower, there have been cases in the past where explicit or implicit currency guarantees have been attacked by speculators to test the credibility of such guarantees. It remains to be seen whether some could test the EU's resolve.

    At the same time, the decision signals that the European Union is determined to preserve the common currency. IMO, this decision undermines arguments made by some that the Greek debt crisis would shatter the European Union.

    From Bloomberg.com:



    EU to Set Up Fund to Prevent Spread of Greek Crisis (Update1) - Bloomberg.com
    I wonder if this is related.

    Fed Restarts Currency-Swap Tool as Sovereign-Debt Crisis Flares - Bloomberg.com
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    Re: EU to Set Up Fund to Prevent Spread of Greek Crisis

    Quote Originally Posted by American View Post
    Although the swaps arrangement wasn't mentioned in the EU's press release, I believe it helps assure orderly market function. That should also help ease some of the problems that arose in recent days when market function begain to break down.

    The Federal Reserve's statement can be found at: FRB: Press Release--Federal Reserve, European Central Bank, Bank of Canada, Bank of England, and Swiss National Bank announce re-establishment of temporary U.S. dollar liquidity swap facilities--May 9, 2010

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    Re: EU to Set Up Fund to Prevent Spread of Greek Crisis

    Even as the EU's package and extraordinary monetary policy measures seek to stabilize Europe's financial markets, it should be noted that there is an expectation that Europe's heavily-indebted countries will take the measures necessary to address their fiscal challenges.

    For example, the ECB's statement from this morning that discusses the ECB's policy decision explains:

    In making this decision we have taken note of the statement of the euro area governments that they “will take all measures needed to meet [their] fiscal targets this year and the years ahead in line with excessive deficit procedures” and of the precise additional commitments taken by some euro area governments to accelerate fiscal consolidation and ensure the sustainability of their public finances.

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    Re: EU to Set Up Fund to Prevent Spread of Greek Crisis

    what would you expect the bank to say?

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    Re: EU to Set Up Fund to Prevent Spread of Greek Crisis

    Quote Originally Posted by The Prof View Post
    what would you expect the bank to say?
    That the ECB's short-term efforts to help the EU mitigate potential liquidity issues is related to helping the EU's heavily-indebted states to address their long-term solvency issues and that there is an explicit expectation that those states would do so with the breathing room they have gained from the emergency policy measures.
    Last edited by donsutherland1; 05-10-10 at 03:32 PM.

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