European Crisis: Your 1 Minute Update

This is where we stand right about now.

  • Future of the euro area — German Finance Minister Schäuble and former ECB president Trichet float proposals on the future of the euro area – an elected EU president, political union, “federation by exception”. While more integration is likely as a response to the current crisis, progress is not likely to be quick.
  • France and the fiscal compact — German FM Schäuble and Eurogroup chairman Juncker are confident that French President Hollande and German Chancellor Merkel will find a common position on the fiscal and growth pact. New French FM Moscovici says France will not ratify the pact unless it includes ambitious commitments to promote economic growth. However, with results of the French public finance audit due on 1 June, fiscal consolidation may get more airtime in the legislative election campaign than during the presidential one.
  • EU bank resolution scheme: The head of the banking unit at the EU Commission indicated that a crisis management proposal to wind up failing banks would be adopted by the EU on June 6.
  • Spain — Economy secretary Fernando Jimenez was quoted by Reuters on Thursday saying that, with Spain having done everything necessary in terms of fiscal policy adjustments and structural reforms, "we think that there should be some type of reaction from the ECB". He denied the story run in El Pais that Bankia has lost over €1bn in deposits, around 1% of retail and corporate accounts, in the past week. LCH.Clearnet hiked Spanish bond margins (>1.5 years) on Friday. 
  • Moody's downgrades 16 Spanish banks. Spanish government approves 2012 budgets for 16 out 17 of the autonomous regions. In the process, Spain discovered that its 2011 budget deficit was not 8.5% of GDP, but 8.9%. Oops 
  • Netherlands: Some details on austerity measures. According to De Telegraaf, the austerity package will include measures worth €16bn and taking into account the impact on the economy and also €1bn of extra spending, the government will expect a reduction in the budget deficit of €12bn.
  • Greece — Fitch downgrades Greece rating from B- to CCC. Fitch said that should new elections fail to result in a mandate for a new government to continue austerity measures, a Greek exit from the monetary union would be "probable".One poll shows New Democracy back in the lead... Other poll shows Syriza still in the lead.
  • Ireland — Opinion poll shows junior coalition party Labour losing support. According to a Millward Brown opinion poll in today’s Irish Independent, the
    governing Fine Gael party is on 34% (down 2 points since the general election), but its coalition partner Labour is down four points to 15%, losing voters to opposition Sinn Fein (up seven points to 17%) or to Independents (up one point to 18%). Opposition Fianna Fail remains on 17%. Satisfaction with the coalition is at 29%, with 65% dissatisfied and 5% Don’t Knows. PM Enda Kenny’s satisfaction rating is at 42% (52% dissatisfied), while Labour leader Eamon Gilmore gets a satisfaction rating of 33% (56% dissatisfied).
  • Sweden — FSA sidesteps rules to foster corporate debt. Scandi currencies hit by risk aversion. The FSA is allowing corporate debt traders to keep daily bond and pricing data to themselves even though they are required to follow the same transparency rules, which apply to sovereign and mortgage debt, Bloomberg reports. According to the FSA, this compromise is taken out of necessity as regulators work out how to support a burgeoning market. “Sweden’s corporate bond market is pretty small with few trades and low liquidity. We would like to see a better working, more transparent market, but we do not see our job as regulating the creation of a market,” FSA said in an interview with Bloomberg.
  • Hungary — Pressure to rise before loan talks can proceed. The fact that Hungary holds up the start of the negotiations on one minor issue suggests that the government is still gambling, hoping that it can either avoid a deal or – more realistically – loosen conditions as the deepening crises in peripheral  Europe may ease international lenders’ stance towards Hungary.

The above mostly via Citi's Jurgen Michels.

  • But the most important: episodic rumors, news, and speculation about bank runs in various stable and not so stable European countries.

Heeeeere's Cramer:



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