Opinion

Paul Taylor

IMF in exploratory talks with Italy on support -sources

Paul Taylor
Nov 29, 2011 21:12 UTC

WASHINGTON/BRUSSELS, Nov 29 (Reuters) – Italy has had
preliminary discussions with the International Monetary Fund
about financial support to cope with the euro zone’s debt
crisis, possibly co-funded by national European central banks,
but no decision has been taken, several sources close to the
situation said.

New Italian Prime Minister Mario Monti was briefing euro
zone finance ministers on his fiscal plans on Tuesday but the
sources said no formal request for IMF assistance was expected
before he presents his budget to the cabinet on Dec. 5.

In Spain, the centre-right People’s Party (PP), which won a
Nov. 20 general election, is considering seeking international
aid as one option for shoring up Madrid’s public finances,
according to sources close to the party.

The PP and the outgoing Socialist government denied there
were any such talks.

The situation is complicated by the fact that centre-right
Prime Minister-elect Mariano Rajoy has not yet formed his
government and will only take office around Dec. 20, although he
is expected to outline key economic plans on Dec. 8.

A source familiar with both sides of exploratory talks
between Italy and the IMF said high level discussions had been
under way for weeks but had accelerated since last Wednesday,
when Germany made clear the European Central Bank could not
directly assist Rome.

Insight: Euro zone staring into the abyss, waiting for ECB

Paul Taylor
Nov 28, 2011 06:57 UTC

BRUSSELS (Reuters) – The euro zone is staring into the abyss.

Unless European leaders agree on a political remedy for their sovereign debt crisis at a December 9 summit, and the European Central Bank then intervenes massively to support government bonds and European banks, the euro may start to unravel.

Foreign investors are already shunning euro area sovereign bonds, European banks are desperately trying to sell assets including bonds, depositors are withdrawing growing amounts from southern European banks, and interbank lending is freezing up, forcing ever more lenders to turn to the ECB for funds.

Italy, the third largest and most vulnerable euro zone state, has a mountain of debt to refinance from January, and its short-term borrowing rate hit an alarming 8 percent on Friday.

Euro zone staring into the abyss, waiting for ECB

Paul Taylor
Nov 28, 2011 06:56 UTC

BRUSSELS (Reuters) – The euro zone is staring into the abyss.

Unless European leaders agree on a political remedy for their sovereign debt crisis at a Dec. 9 summit, and the European Central Bank then intervenes massively to support government bonds and European banks, the euro may start to unravel.

Foreign investors are already shunning euro area sovereign bonds, European banks are desperately trying to sell assets including bonds, depositors are withdrawing growing amounts from southern European banks, and interbank lending is freezing up, forcing ever more lenders to turn to the ECB for funds.

Italy, the third largest and most vulnerable euro zone state, has a mountain of debt to refinance from January, and its short-term borrowing rate hit an alarming 8 percent on Friday.

Think-tank proposes short-term euro zone bond fix

Paul Taylor
Nov 27, 2011 23:08 UTC

BRUSSELS (Reuters) – Euro zone states should pool their short-term borrowing via a joint fund to enable countries pursuing EU-approved policies, but unable to borrow at normal rates, to access affordable funding, a European think-tank panel proposed on Monday.

A group of bankers, economists and market experts from the European League for Economic Cooperation suggested an EMU Bond Fund as a bridging solution to the euro zone’s sovereign debt crisis, aimed at restoring market confidence.

“Our modest proposal is designed to provide a limited degree of mutual support that will be sufficient to allow adequate time to states that are themselves trying to restore their competitiveness,” the authors wrote.

Some German red lines may not be so red

Paul Taylor
Nov 21, 2011 10:44 UTC

BERLIN (Reuters) – At first sight, Germany appears to have blocked all exits from the euro zone’s blazing sovereign debt inferno. On closer inspection, some German “red lines” may be less red than others.

If Chancellor Angela Merkel wins acquiescence from European Union partners to a treaty change Berlin is seeking to impose intrusive fiscal discipline on “debt sinners”, aides hint she will permit bolder measures to fight the crisis.

Those could include more European Central Bank buying of stressed countries’ bonds in the short run, in tandem with bond insurance by the euro zone rescue fund, and accepting the idea of common euro zone “stability bonds” as a long-term goal.

Analysis – Some German red lines may not be so red

Paul Taylor
Nov 18, 2011 16:30 UTC

BERLIN (Reuters) – At first sight, Germany appears to have blocked all exits from the euro zone’s blazing sovereign debt inferno. On closer inspection, some German “red lines” may be less red than others.

If Chancellor Angela Merkel wins acquiescence from European Union partners to a treaty change Berlin is seeking to impose intrusive fiscal discipline on “debt sinners,” aides hint she will permit bolder measures to fight the crisis.

Those could include more European Central Bank buying of stressed countries’ bonds in the short run, in tandem with bond insurance by the euro zone rescue fund, and accepting the idea of common euro zone “stability bonds” as a long-term goal.

Four weeks countdown to rescue euro zone

Paul Taylor
Nov 15, 2011 16:00 UTC

PARIS (Reuters) – Europe’s leaders have less than a month to strike another grand bargain to rescue the euro zone from a worsening sovereign debt crisis. Contagion in financial markets may have to get still worse to concentrate their minds.

In that short time scale, German Chancellor Angela Merkel must unite her coalition behind potentially unpopular decisions and French President Nicolas Sarkozy must act to defend his country’s shaky AAA credit rating.

The new leaders of Italy and Greece must start enacting far-reaching austerity plans and economic reforms despite feuding politicians and social protests. A new Spanish government to be elected on Sunday must convince investors it will take bold action to restore competitiveness and clean up a housing bust.

Analysis: Four week countdown to rescue euro zone

Paul Taylor
Nov 15, 2011 15:57 UTC

PARIS (Reuters) – Europe’s leaders have less than a month to strike another grand bargain to rescue the euro zone from a worsening sovereign debt crisis. Contagion in financial markets may have to get still worse to concentrate their minds.

In that short time scale, German Chancellor Angela Merkel must unite her coalition behind potentially unpopular decisions and French President Nicolas Sarkozy must act to defend his country’s shaky AAA credit rating.

The new leaders of Italy and Greece must start enacting far-reaching austerity plans and economic reforms despite feuding politicians and social protests. A new Spanish government to be elected on Sunday must convince investors it will take bold action to restore competitiveness and clean up a housing bust.

Euro zone treads obstacle course to crisis exit

Paul Taylor
Nov 14, 2011 13:48 UTC

PARIS (Reuters) – The euro zone has to tread a narrow path sown with landmines in the next few weeks to survive perhaps the most dangerous phase of its sovereign debt crisis, policymakers and bankers say.

European Union governments have until a summit on December 9 to come up with the outlines of a much bolder and more convincing strategy, with some form of massive, visible financial backing.

The prospects are uncertain because the German government, the Bundesbank and hardliners in the European Central Bank have so far blocked key policy options. These include issuing common euro zone bonds, mutualising the euro zone’s debt stock, letting the ECB create money to fight the crisis, or act as a lender of last resort, directly or via the euro zone rescue fund.

Analysis: Euro zone treads obstacle course to crisis exit

Paul Taylor
Nov 14, 2011 13:40 UTC

PARIS (Reuters) – The euro zone has to tread a narrow path sown with landmines in the next few weeks to survive perhaps the most dangerous phase of its sovereign debt crisis, policymakers and bankers say.

European Union governments have until a summit on December 9 to come up with the outlines of a much bolder and more convincing strategy, with some form of massive, visible financial backing.

The prospects are uncertain because the German government, the Bundesbank and hardliners in the European Central Bank have so far blocked key policy options. These include issuing common euro zone bonds, mutualising the euro zone’s debt stock, letting the ECB create money to fight the crisis, or act as a lender of last resort, directly or via the euro zone rescue fund.

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