Eurozone bail-out funds not enough, warns OECD

International debt inspectors believe they have found another €15bn (£12.5bn) black hole in Greece’s public finances caused by the deepening recession, delivering the crippled nation another devastating blow.

With pressure growing over talks with private investors about the terms of a €100bn debt write-off, officials calculated that to bring the country’s debts to a sustainable level at 120pc of GDP the international community would need to find an extra €15bn, raising the prospect of a Greek default.

Sources told news organisations in Brussels that weak growth will make it even more difficult for Greece to resolve its debt problem, leaving the eurozone and the International Monetary Fund with the prospect of an even larger bail-out than the €130bn planned.

The warning came as the Organisation for Economic Co-operation and Development (OECD) said the emergency bail-out funds are not big enough.

The international think-tank said the European Financial Stability Facility’s (EFSF) €440bn (£366bn) firepower “is not enough” to support the lending requirements of indebted countries, particularly given that it “has not found it easy to raise funds with low yields”.

Greece, Portugal, Italy, Ireland and Spain need to repay a total of €700bn this year and €400bn next year.

The EFSF’s replacement, the European Stability Mechanism (ESM), will have €80bn of capital and a combined lending power of €500bn. “This too may not be enough,” the OECD said, adding that “further thought will need to be given to contingency plans”.

The OECD argued that the “only plausible mechanisms” were to give the EFSF a banking licence; to allow the European Central Bank (ECB) to lend funds to the IMF to distribute; or to see if “sovereign wealth funds could be cajoled with appropriate guarantees [possibly via the IMF] to provide the funds”.

"Separately, Angela Merkel, the German Chancellor, held talks with the Chinese premier, Wen Jiabao, in Beijing, who raised hopes that China could contribute to the eurozone bail-out fund "

Seems the ChiComs are more interested intangible assets. The Reds bought half of Portugal's electric grid. Utilities are a better investment than BBB+ bonds.

From Süddeutsche Zeitung, Munich:

Possibly related to:

http://news.bbc.co.uk/democracylive/hi/europe/newsid_9690000/9690683.stm
and
http://www.bbc.co.uk/news/world-europe-16803157

The UK government has been warned it will “regret” refusing to sign up to the EU’s new treaty on enforcing budgetary discipline.

Joseph Daul, who leads the parliament’s centre-right EPP group, made the claim during a debate on 1 February 2012 on the recent summit of EU leaders.

Video at first link.

Cameron showed some semblance of a spine - who knew!

That might be a part of it.

The BBC has been so watered down and laden with “Fair and Balanced” that they can not really report stories on their own merits any more, though they do try. I’ll give them that, the actual news is minimally biased either way.

Since they have been funded for four more years, they can thumb their nose at the UK. A bit like the EU does once it gets our contribution every year.
Watch them change their tune during the next license fee renewal!

Did something I almost never do and turned on the idiot box yesterday, looking for the story in the second link. Well, I watched BBC News 24 for an hour and not a sign of the story. Tried the evening news - it got 30 seconds. Sarkozy got more face time.

Going to be fair(ish) to Cameron. He has slapped down hard on any additional taxes and levies from Brussels to support the Euro.
They made the mess. We stayed out of it, and were warned that we would be left behind by the federal Europe.

Now they are attempting to force a bailout of their failed policies by the UK. Not a loan, or a gesture, but actually force a levy on bank transactions throughout Europe.

I am sure that the minor fact that 95% of all financial dealings in Europe go through the City of London, and the levy would destroy our limping economy totally is a pure accident and not worthy of mention.

The perception here amongst the (few) remaining conservatives is that Germany is trying it again. Laws and regulations instead of guns this time, but attempting to run Europe.
That chills me. A few days ago I received a small but heavy parcel from my Dad. A 1 lb tobacco tin containing my Grandad’s medals from WW1. It got me thinking.

Sorry, that was a bit of a rant, wasn’t it! Please take it in the spirit intended. Information to the thread and yourself, and a lot of frustration.

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