Reuters blog archive
from Hugo Dixon:
By Hugo Dixon
Hugo Dixon is Editor-at-Large, Reuters News. The opinions expressed are his own.
The markets are right to worry about the euro zone, the epicentre of last week’s fright. Its three big economies – Germany, France and Italy – are, in their own ways, stuck.
There is, in theory, a grand bargain that might shift the malaise. This would involve deep structural reform by Berlin as well as Paris and Rome; quantitative easing by the European Central Bank to boost inflation; and some loosening of fiscal straitjackets.
But such a deal – hinted at by Mario Draghi, the ECB president, in his Jackson Hole speech in August - is unlikely to materialise soon, if at all.
The big question of the week is whether financial market gyrations continue, worsen or calm. European stocks are being called higher at the open.
Greece has been effectively shut out of the bond market. If it and others on the euro zone’s southern flank come under persistent market pressure, in a way that hasn’t happened for two years, the onus on the European Central Bank to act will grow and grow.
Russian President Vladimir Putin and Ukrainian President Poroshenko are due to meet on the sidelines of the EU/Asia summit in Milan today to try to find a way out of the Ukraine crisis.
Germany’s Angela Merkel and French President Hollande will also meet the pair as part of a four-way contact group. The Kremlin has just said Putin and Merkel have "serious differences".
A two-day summit of EU and Asian leaders, which was going to be most notable for a meeting between the heads of Russia and Ukraine, risks being overtaken by financial market tremors which have spread worldwide.
There’s a good case that markets, primed with a glut of new central bank money, had climbed to levels which the state of the economies that underpin them did not justify. With the Federal Reserve about to turn its money taps off, investors seem to have woken up to poor growth prospects in much of the world.
France will submit its 2015 budget to the European Commission today and, after a respectable period of consideration, it is likely to be thrown right back.
Paris has confirmed it will yet again miss the EU’s debt limits, failing to achieve a budget deficit of three percent of GDP until 2017 four years after it should have done.
The European Court of Justice holds a first hearing on the legality of the European Central Bank's Outright Monetary Transactions programme. There won’t be anything definitive today but it serves to rekindle debate about the limits of the ECB’s powers.
In February, the German Constitutional Court asked the European Court to rule on the legality of OMT, the mechanism that drew a line under the euro zone crisis when it was unveiled in 2012. The court may give guidance about how best to make a final ruling which is expected in late spring next year.
from Photographers' Blog:
By Neil Hall
The Arch to Arc is billed as the hardest triathlon in the world. It is comprised of a 87 mile run from Marble Arch in London to Dover, a swim across the Channel to Calais in France, finishing with a 180 mile bike ride to the Arc de Triomphe in Paris.
49-year-old charity worker, and recovering alcoholic, Paul Parrish hoped to be the oldest man to complete the event.
The predictable battle lines were drawn at the G20/IMF meetings in Washington - most of the world urged Europe to do more to foster growth while Germany warned against letting up on austerity. The argument will doubtless be reprised today when euro zone finance ministers meet in Luxembourg.
Given a ghastly run of German data last week and sharp cuts to its growth forecasts by the IMF and Germany’s economic institutes, Berlin’s stance looks increasingly odd but Finance Minister Wolfgang Schaeuble continued to make it abundantly clear he will not countenance any more public spending in the one European country that could really afford it.
from Anatole Kaletsky:
An “atomic bomb” is about to blow up in “the confrontation between Paris and Brussels.”
It was in these terms that Le Figaro, perhaps the most influential French newspaper, reported the European Commission’s near-certain rejection of President Francois Hollande’s 2015 budget on Oct. 29. That is the date the commission must issue a judgment on the French budget, which proposes a two-year delay in reducing the budget deficit to the EU-mandated maximum of 3 percent of gross domestic product.
You wait ages for a no-confidence vote then two come along on the same day. Neither are expected to cause governments to topple.
Greece’s ruling coalition will hold a confidence vote in parliament in an effort to end speculation that the country may be facing snap elections early next year.