Eurozone Crisis: Banks Agree 50% Reduction on Greece's Debt
THE GUARDIAN: Private investors take 'haircut' on Greek bonds in €100bn bailout that also strengthens European rescue fund

Europe's leaders are claiming a victory in the eurozone crisis after agreeing new deals that slash Greek debt and increase the firepower of the main bailout fund to around €1 trillion (£872bn).

Athens will be handed a new €100bn bailout early in the new year. The accord was reached in the early hours of Thursday after hours of debate.

At one stage talks broke down with holders of Greek debt but they ended up accepting a loss or "haircut" of 50% in converting their existing bonds into new loans.

Investors are likely to welcome the breakthrough. Sharp gains are predicted for European markets on opening, with the FTSE 100 being called up 75 points and similar rises expected on the German and French stock markets.

Angela Merkel, the German chancellor, helped broker the deal in talks with the bankers that also included the French president, Nicolas Sarkozy, and the head of the IMF, Christine Lagarde.

Merkel said the swap would take place in January. Sarkozy said private sector investors would refinance Greek's remaining debt at preferential rates while governments would find €30bn to go alongside €100bn from the private sectors. » | David Gow in Brussels | Thursday, October 27, 2011

Video: Eurozone and investors agree to halve Greek debt: Breakthrough in crisis talks as banks accept 50% cut to Greek bonds that will be converted into loans and euro rescue fund is strengthened »

Eurozone bailout deal for Greece – full text: Read the full euro summit statement on the agreement to halve Greece's bond debt to banks, provide bailout funds and bolster the EU's emergency finance system » | guardian.co.uk | Thursday, October 27, 2011

The Horrible Truth Starts to Dawn on Europe's Leaders
TELEGRAPH BLOGS – AMBROSE EVANS-PRITCHARD: The entire European Project is now at risk of disintegration, with strategic and economic consequences that are very hard to predict.

In a speech this morning, EU President Herman Van Rompuy (poet, and writer of Japanese and Latin verse) warned that if Europe’s leaders mishandle the current crisis and allow the eurozone to break up, they will destroy [the] European Union itself.

“We’re in a survival crisis. We all have to work together in order to survive with the euro zone, because if we don’t survive with the euro zone we will not survive with the European Union,” he said.

Well, well. This theme is all too familiar to readers of The Daily Telegraph, but it comes as something of a shock to hear such a confession after all these years from Europe’s president.

He is admitting that the gamble of launching a premature and dysfunctional currency without a central treasury, or debt union, or economic government, to back it up – and before the economies, legal systems, wage bargaining practices, productivity growth, and interest rate sensitivity, of North and South Europe had come anywhere near sustainable convergence – may now backfire horribly.

Jacques Delors and fellow fathers of EMU were told by Commission economists in the early 1990s that this reckless adventure could not work as constructed, and would lead to a traumatic crisis. They shrugged off the warnings. Read on and comment >>> Ambrose Evans-Pritchard | Tuesday, November 16, 2010

Legal Noose Tightens on Europe's Monetary Union
TELEGRAPH – BLOGS – AMBROSE EVANS-PRITCHARD: The plot continues to thicken at Germany’s constitutional court, a body with power of life or death over Europe’s monetary union.

Contrary to general belief, Germany’s eurosceptic professors have not abandoned their legal efforts to block the EU rescues for European banks exposed to Greek debt, and since May 7 for banks exposed to debt from Spain, Portugal, and Ireland as well.

Should they succeed, of course, the eurozone risks disintegration within days, and perhaps hours. I am not sure that investors in New York, London, Tokyo, Beijing, or indeed Frankfurt quite understand this.

There are now four cases at the court – or Verfassungsgericht – arguing that these disguised bank bail-outs breach multiple clauses of EU treaty law, and therefore breach Germany’s supreme and sovereign Basic Law.

A quintet of professors – Wilhelm Hankel, Wilhelm Nölling, Joachim Starbatty, Karl Albrecht Schachtschneider, and Dieter Spethmann (ex Thyssen CEO) – have just broadened their complaint over the Greek part of the bank rescue to include the new €440bn Stability Facility, which breaks EU law at every turn.

It also covers the European Central Bank’s mass purchase of Greek, Spanish, Portuguese, and Irish bonds from private banks. This enables investors who bought these bonds during the credit bubble in order to boost yield – just as they bought US subprime CDOs to boost yield – to shift the consequences of their own misjudgements onto taxpayers (Hedge funds were already “long” Club Med debt, of course, when the ECB stepped in so they simply make a speculative gain from taxpayers). >>> Ambrose Evans-Pritchard | Thursday, July 08, 2010

The Euro Mutiny Begins
The Colosseum in Rome, Italy, where economists have openly questioned the euro's future. Photo: Google Images
THE TELEGRAPH: The rebellion against the 1930s fiscal and monetary policies of the Euro-complex is gathering pace.

Il Sole has published a letter by 100 Italian economists warning that the austerity strategy imposed by Brussels/Frankfurt risks tipping Europe into a self-feeding downward spiral. Far from holding the eurozone together, it will cause weaker countries to be catapulted out of EMU. Others will leave in order to restore sovereign control over their central banks and unemployment policies.

At worst it will blow the EU apart, leading to the very acrimony that the European Project was supposed to prevent.

For readers of Italian, it’s here.

While I don’t share the big-state Left-Keynesian perspective of these professors — nor their implicit hostility to the free market — I do agree with much of their overall analysis. >>> Ambrose Evans-Pritchard | Wednesday, June 14, 2010

Lettera di 100 economisti contro la manovra e la linea (europea) dell'austerità >>> mercoledi 16 giugno 2010

Zeal and Angst: Germany Torn Over Role in Europe
Helmut Kohl, left, returns to the European stage. Photograph: The Wall Street Journal
THE WALL STREET JOURNAL: LUDWIGSHAFEN, Germany—Helmut Kohl, frail and confined to a wheelchair, returned to public view this week, imploring his countrymen not to abandon the goal he spent his political life pursuing: a united Europe.

"Today, I am convinced more than ever that European unification is a question of war and peace for Europe and for us, and the euro is part of our guarantee of peace," the former chancellor, his voice uneven and raspy, told guests at a celebration for his 80th birthday.

As Chancellor Angela Merkel looked on, Mr. Kohl issued a thinly veiled critique of her reluctance to help Greece, saying he couldn't understand "people who act as if Greece doesn't matter." Of course the situation is difficult, but Germany must pull out all the stops, he said, drawing applause from the crowd.

The scene underscored the threat Greece's turmoil poses to monetary union, the grandest expression of the European continent's drive toward integration. Mr. Kohl led the unification drive two decades ago. Now the increasingly disruptive debt problems in Greece and elsewhere post the question: What price is Germany willing to pay to save Europe? >>> Marcus Walker and Matthew Karnitschnig | Saturday, May 08, 2010