The Cold War In The European Core: Luxembourg Wants Eurozone Bonds; Germany Says Drop Dead
Last night, in a less than surprising Op-ed in the FT, Jean-Claude Juncker and Giulio Tremonti, prime minister and treasury minister of Luxembourg and Italy’s minister of economy and finance respectively, once again floated the idea that the time has come for a joint European bond issuance mechanism, because apparently lack of individual monetary policy is not enough, European countries now have to surrender their fiscal decision making to a bunch of dogmatic bureaucrats in Brussels. The desperate duo, which knows all too well, that they could well be next on the bond vigilantes radar, write: " The European Council could move as early as this month to create such an agency, with a mandate gradually to reach an amount of outstanding paper equivalent to 40 per cent of the gross domestic product of the European Union and of each member state." We ridiculed the idea last night, noting that this proposal would only happen over Germany's dead body, which already sees as contributing far too much to keeping the European experiment alive and getting only dirty looks from its voters. Today, Germany steps up and confirms: "Germany on Monday rejected the idea of increasing the size of the European Union's safety net and ruled out a proposal to issue a joint euro zone bond." And additionally recent pressure to hike the rescue fund by the IMF and internally were also promptly shut down by Germany, which as we pointed out last week threatened to pull out of the Euro if the political wrangling by pathological liars such as the Greek elite continued: "We see no
reason at all at the moment for an increase in the size of the
euro rescue shield -- no reason at all." Which means that with no recourse to do anything structural, the ECB is back to buying up Portuguese bonds in a fake bid to create a sense of normalcy in the bond market, which everyone with half a brain knows will collapse the second the ECB pulls out or runs out of paper.
More from Reuters:
Chancellor Angela Merkel said Europe needs the euro and that Germany would do everything to ensure the single currency was strong and safe. Government spokesman Christoph Steegmans echoed her comments.
"Germany feels committed to the euro, like all member states," Steegmans told a regular government news conference. "In a nutshell, if the euro fails, then Europe fails -- that is the position of the whole government."
"The government stands squarely behind the euro and its stability, we have never let there be any doubt about that," he said, adding: "I want to stress that Germany has a great interest in the stability of the euro growing."
Euro zone finance ministers, who meet in Brussels later on Monday, face pressure to increase the size of a 750 billion euro ($994.5 billion) safety net for debt-stricken members in order to halt contagion in the single currency bloc.
Steegmans rejected this idea, telling reporters: "We see no reason at all at the moment for an increase in the size of the euro rescue shield -- no reason at all."
Steegmans ruled out the "E-bond" idea.
"The government rejects euro-bonds not just on economic grounds but also because that would require considerable treaty changes," he said.
So what should one expect out of today's meeting aside from nothing? "The meeting of the Eurogroup today ... will give a joint
signal for more stability and confidence." In other words expect more lies that all is good, that Trichet is not buying bonds even as he is buying bonds, that Greece's numbers are finally correct after one million consecutive downward revisions, and that the BLS may soon be appointed as third party data processor of European economic data. And other such lunacies.
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