Sunday, November 20, 2011

Europe Update

by Calculated Risk on 11/20/2011 08:42:00 PM

From the Athens News: PM heads for Brussels to try to secure cash

New prime minister headed to Brussels on Sunday to fight for the aid Athens needs to avoid bankruptcy, even as one of his coalition backers refused to give a written pledge to support reforms and a public sector union geared up for strikes.

Lucas Papademos must convince the International Monetary Fund and the European Union to give Greece the 8 billion euros it needs to avoid a mid-December default ...

[D]uring the [troika] visit, New Democracy head Antonis Samaras refused to give a written guarantee that he would continue to do whatever it took to meet the terms of the bailout no matter who wins an election tentatively set for Feb. 19.
Most analysts think there will a compromise and Greece will receive the next aid tranche before mid-December.

From the WSJ: EU Paper Offers Options for Euro Bonds
The [European Commission] discussion paper suggests three options for issuing euro bonds. ...

The first option it discusses would be to substitute all national issues by governments with euro bonds carrying what it calls a "joint and several" guarantee, meaning that euro-zone states would pool the credit risk and each government would agree to guarantee the debt of every other government. ... The second option would be to partially substitute national issuance with euro bonds up to a limit, of say 60%, of a country's gross domestic product ... Those two options would require treaty changes ...

[The] third approach would have euro bonds replace some national bond issues—but the euro bonds would receive guarantees from each government only up to specific limits [and would not require a treaty change].
And from the BBC: Spain election: Rajoy's Popular Party declares victory
Mr Rajoy, who is expected to tackle the country's debts amid slow growth and high unemployment, said he was aware of the "magnitude of the task ahead".

He told supporters there would be "no miracle" to restore Spain to financial health ... The new government will have little time to show results and people are bracing themselves for a new wave of spending cuts, our correspondent adds.

Over the past week, borrowing rates have risen to the 7% level which is regarded as unsustainable. Unemployment stands at five million.

Miguel Arias, the Popular Party's campaign co-ordinator, said Spain was "going to make all the sacrifices".

"We have been living as a very rich country," he told BBC News.
More austerity ...

Yesterday:
Summary for Week Ending Nov 18th
Schedule for Week of Nov 20th
Lawler: Household Growth by Age Group: 2010 – 2015 “Conservative” Forecasts