Posted on 06/13/2012 1:22:19 PM PDT by bruinbirdman
The German government has begun opening the door to shared debts for the first time in a profound change of policy, agreeing to explore proposals for a €2.3 trillion (£1.9 trillion) stabilization fund in order to stop the eurozone’s crisis escalating out of control.
Officials in Berlin say privately that Chancellor Angela Merkel is willing to drop her vehement opposition to plans for a “European Redemption Pact”, a “sinking fund” that would pay down excess sovereign debt in the eurozone.
“It is conceivable so long as there is proper supervision of tax revenues,” said a source in the Chancellor’s office. The official warned that there would be no “master plan” or major break-through at the EU summit later this month.
Mr Merkel rejected the Redemption Pact last November as “totally impossible”, even though it was drafted by Germany’s Council of Economic Experts or Five Wise Men and is widely-viewed as the only viable route out of the current impasse.
Fast-moving events may have forced her hand. She is under immense pressure from the US, China, Britain, and Latin Europe to change course as the crisis engulfs Spain and Italy, threatening a global cataclysm.
Jose Manuel Barroso, the European Commission’s chief, warned that Europe faces a “social emergency” . Countries sticking to reforms are engulfed by forces beyond their control.
“We must recognise that we have a systemic problem. I am not sure the urgency of this is fully understood in all the capitals,” he said in a thinly veiled attack on Berlin.
Yields on 10-year Spanish debt hovered at danger levels just under 6.8pc on Wednesday on doubts that the EU’s €100bn rescue for the country will be the end of the story, with drastic knock-on effects in Italy. “The crisis will inevitably roll onto the
(Excerpt) Read more at telegraph.co.uk ...
Cue up the Dow...
Interesting details:
'Experts say this overlooks the tough conditionality. Italy and other states would have to pledge gold and other forms of collateral equal to 20pc of their debt in the fund. '
Looks like Merkel just buckled under the pressure. So sovereign debt above 60% of GDP will be pooled and the claim is the rules for the Euro will prevent countries going above 60%. These rules did not work for the past 10 years so how will “enforcement” be any different?
The Mediterranean nations will promise and then refuse to adopt the necessary austerity programs, like always.
The Mediterranean nations will refuse to fork over their hard currency assets, like always.
Mediterranean nations' governments will topple, again.
Mediterranean nation citizens will riot in the streets, again.
The Germans will pull away the punch bowl, again.
The Euro will fold just as predicted. (see tagline)
Where the hell do these idiotic leaders get the idea that their citizens should assume the debt of people from other nations that would not act with fiscal prudence to the point they needed to be bailed out to the tune of tens of hundreds of billions?
This is an admission that Chancellor Angela Merkel is too stupid to lead a government supposedly looking out for the German people.
Too many people get elected to government simply to protect it rather than the people it is supposed to answer to.
How is “other forms of collateral” defined? Will the Greeks put up the Acropolis as “collateral”?
There is only one route out of their mess and that’s outright default. Sadly these idiots are going to pour more and more imaginary cash into these sinking ships. And Italy, Greece, and Spain are never, ever going to “hand over” any collateral.
Not gonna happen.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.