Wednesday, October 12, 2011

Europe Update: Slovakia clears hurdle on EFSF, More Capital for Banks, Leverage for EFSF?

by Bill McBride on 10/12/2011 08:05:00 PM

A few European stories ... the next key date is Sunday, October 23rd, when European Union leaders will hold a summit meeting.

This is probably the last mention of Slovakia for some time, from the WSJ: Europe's Bailout Fund Overcomes a Hurdle

Slovakia's largest opposition party ... cleared the way Wednesday for the country to endorse changes to the €440 billion ($600 billion) euro-zone bailout fund
From the NY Times: E.U. Tells Banks to Garner Bigger Reserves
Under proposals outlined by the European Commission president, José Manuel Barroso, banks would be required to temporarily bolster their protection against losses ... Mr. Barroso also called on the 17 European Union members that use the euro to maximize the capacity of their 440 billion euro ($600 billion) bailout fund — a clear hint that he favors leveraging the rescue fund to increase its firepower to as much as 2 trillion euros ($2.8 trillion)
From the Financial Times: Insurance plan to boost rescue fund’s reach
European policymakers are moving towards a plan that would enable the eurozone’s €440bn rescue fund to insure investors against some losses on government bonds, arguing it presents the fewest legal and political hurdles to quickly increasing the fund’s firepower.
excerpt with permission
On Thursday, Greek prime minister George Papandreou is is meeting with Herman van Rompuy, president of the European council, and Jean-Claude Juncker, chair of euro finance ministers in Brussels.

The Greek 2 year yield isat 73.5%. The Greek 1 year yield is at 156.4% (a new high).

The Portuguese 2 year yield is at 17.3% and the Irish 2 year yield is at 7.4%.

The Spanish 10 year yield is at 5.1% and the Italian 10 year yield is at 5.7% (the Italian bond yield is moving up).