Opinion

Paul Taylor

Analysis – Euro zone crisis reaches France, turns existential

Paul Taylor
Aug 12, 2011 13:40 UTC

PARIS (Reuters) – It was the week the euro zone debt crisis reached France, one of the twin pillars of the European currency alongside Germany.

As jitters over Paris’ prized top-notch AAA credit rating took hold, President Nicolas Sarkozy returned from the beach to order up new austerity measures. Then panic selling of French bank shares and an abrupt halt to economic growth added to France’s plight.

The sight of the euro zone’s number two economy buffeted by rumours and investor anxiety in the midst of the holiday season raised existential questions about European monetary union that will confront Sarkozy and German Chancellor Angela Merkel when they meet in Paris next Tuesday.

The fragile edifice of support for weaker European states would start to crumble if France, the second contributor to the euro zone’s rescue fund, were to face a debt downgrade.

All three major ratings agencies reaffirmed this week that no such downgrade was in the works, but that didn’t suffice to calm markets.

Euro zone crisis reaches France, turns existential

Paul Taylor
Aug 12, 2011 13:40 UTC

PARIS (Reuters) – It was the week the euro zone debt crisis reached France, one of the twin pillars of the European currency alongside Germany.

As jitters over Paris’ prized top-notch AAA credit rating took hold, President Nicolas Sarkozy returned from the beach to order up new austerity measures. Then panic selling of French bank shares and an abrupt halt to economic growth added to France’s plight.

The sight of the euro zone’s number two economy buffeted by rumors and investor anxiety in the midst of the holiday season raised existential questions about European monetary union that will confront Sarkozy and German Chancellor Angela Merkel when they meet in Paris next Tuesday.

Euro zone parliaments seen approving rescue fund powers

Paul Taylor
Aug 9, 2011 14:07 UTC

PARIS, Aug 9 (Reuters) – The euro zone’s financial rescue
fund seems set to win parliamentary approval by mid-October for
expanded powers to help member states in difficulty despite
mounting hostility in northern Europe towards further bailouts.

A Reuters survey suggests new rules allowing
the European Financial Stability Facility to buy bonds on the
secondary market and give precautionary credit lines to
countries before they are shut out of credit markets face few
obstacles in national legislatures with vocal Eurosceptical
minorities.

Goverments in Germany, Austria, Finland, the Netherlands and
Slovakia say they are confident their parliaments will approve a
July 21 agreement by euro zone leaders to widen the scope of the
440-billion-euro EFSF when they resume business in the coming
weeks.

ECB backs Italy, Spain as policymakers pledge action

Paul Taylor
Aug 8, 2011 08:10 UTC

SYDNEY/PARIS, Aug 8 (Reuters) – The European Central Bank
stepped into bond markets on Monday, backing up a pledge to
support Spain and Italy with the aim of averting financial
meltdown in the euro zone, while the G7 and G20 offered soothing
words to investors shaken by a historic downgrade of the U.S.
debt rating.

Spanish and Italian bond yields fell as traders said the ECB
was broadening its bond-buying programme to include debt issued
by the bloc’s third- and fourth-biggest economies, in the latest
effort to staunch Europe’s sovereign debt crisis.

“They’re doing 20 to 25 million (euro) clips and they’re
spreading it around the market,” said a trader. “We expect them
to do billions today.”

Investor fear drowns out ECB, G7 pledges

Paul Taylor
Aug 8, 2011 06:37 UTC

SYDNEY/PARIS, Aug 8 (Reuters) – The European Central Bank
stepped into bond markets on Monday, backing up a pledge to
support Spain and Italy with the aim of averting financial
meltdown in the euro zone, while the G7 and G20 offered soothing
words to investors shaken by a historic downgrade of the U.S.
debt rating.

Spanish and Italian bond yields fell as traders said the ECB
was broadening its bond-buying programme to include debt issued
by the bloc’s third- and fourth-biggest economies, in the latest
effort to staunch Europe’s sovereign debt crisis.

“They’re doing 20 to 25 million (euro) clips and they’re
spreading it around the market,” said a trader. “We expect them
to do billions today.”

Analysis: ECB fumbles between fire hose and sprinkler

Paul Taylor
Aug 8, 2011 05:57 UTC

PARIS (Reuters) – The European Central Bank waved its big fire hose at blazing bond markets, then turned on a puny sprinkler.

Unsurprisingly, the fire refused to go out. Indeed, the flames grew higher, licking the feet of Italy and Spain, the currency area’s third and fourth largest economies.

Three days later, the bank’s governing council decided in an emergency Sunday night conference call to change course abruptly and resort to the big fire hose after all.

G7 gives first sign ready to battle crisis

Paul Taylor
Aug 8, 2011 00:27 UTC

FRANKFURT/PARIS (Reuters) – Political and financial leaders gave their first sign of readiness to battle a debt crisis gone global when the European Central Bank signaled on Sunday it would start buying Italian and Spanish debt, a critical move to quell a bond rout that has rocked financial markets.

The European Central Bank decision would be aimed at calming markets grown increasingly doubtful about Europe’s ability to deal with its debt issues, a strikingly parallel concern to that which led ratings agency Standard & Poor’s to knock U.S. debt down from “risk free” AAA status to AA-plus.

Meanwhile, finance chiefs from Group of Seven industrial nations were to confer by telephone late on Sunday– and possibly issue a statement afterward — to try to soothe anxious investors after a week in which $2.5 trillion of market value was wiped out.

ECB to buy Italian, Spanish bonds to stop contagion

Paul Taylor
Aug 7, 2011 20:48 UTC

BERLIN/PARIS (Reuters) – The European Central Bank will intervene decisively on markets to protect Italy and Spain from an accelerating debt crisis, a monetary source said on Sunday, indicating it would buy government bonds of the euro zone’s third and fourth biggest economies.

The agreement of the bank’s policy-making Governing Council marked a watershed in the ECB’s fire-fighting after modest bond buying efforts last week failed to stem contagion to the currency bloc’s larger economies.

Officials on an ECB conference call carefully considered the situation in Italy and Spain, and took note of a statement by France and Germany on Sunday stressing their commitment to European financial reforms, the source said.

RPT_WRAPUP 6-ECB eyes decision on Italy bond buys to ease debt

Paul Taylor
Aug 7, 2011 19:54 UTC

FRANKFURT/PARIS, Aug 7 (Reuters) – The European Central
Bank faced a decision on Sunday whether to buy Italian bonds to
try to prevent the euro zone debt crisis from widening, while
global policymakers conferred on the twin financial crises in
Europe and the United States.

After a week that saw $2.5 trillion wiped off world stock
markets, political leaders are under searing pressure to
reassure investors that Western governments have both the will
and ability to reduce their huge and growing public debt loads.

ECB President Jean-Claude Trichet wants the policy-setting
Governing Council to take a final decision on buying Italian
paper after Prime Minister Silvio Berlusconi announced new
measures on Friday to speed up deficit reduction and hasten
economic reforms, one ECB source said. [ID:nL6E7J704K]

ECB eyes decision on Italy bond purchase to ease debt

Paul Taylor
Aug 7, 2011 11:49 UTC

FRANKFURT/PARIS (Reuters) – The European Central Bank will decide on Sunday evening whether to buy Italian government bonds to try to speed up cuts in euro zone debt, ECB sources said as global leaders conferred by phone on the twin financial crises in Europe and the United States.

After a week that saw $2.5 trillion wiped off global stock markets, political leaders are under pressure to reassure investors that Western governments have both the will and ability to reduce their huge and growing public debt loads.

ECB President Jean-Claude Trichet wants the policy-setting Governing Council to take a final decision on buying Italian paper after Prime Minister Silvio Berlusconi announced new measures on Friday to speed up deficit reduction and hasten economic reforms, one ECB source said.

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