You’re excused if you don’t know exactly what European leaders decided at the end of today’s summit—they can’t seem to agree either—or what the actual effect might be—the financial markets are positive but confused.
A German government source briefing reporters ahead of the European summit today warned against “exaggerated panic mongering” over the surge in yields on Spanish and Italian government debt. That on a day that saw Italy sell 10-year bonds at 6.19%, up from a 6.03% yield at the last auction
The euro debt crisis calendar according to Italy provides yet more evidence that the summit of European leaders that begins tomorrow is make or break for the euro. By this calendar the technocratic government of Mario Monti has only a month to head off early elections that could sweep anti-euro politicians into power in Rome
The plan from European Union President Herman Van Rompuy, European Central Bank President Marie Draghi, European Commission President Jose Barroso, and Jean-Claude Juncker, head of the euro finance ministers is based on a trade off: In exchange for new joint financial guarantees the plan would give the European Union the power to impose upper limits on annual national budgets and on the debt levels of countries that use the euro.
German Chancellor Angela Merkel said today in Berlin that euro bonds, euro bills and joint European deposit insurance are “economically wrong and counterproductive.” What’s more, Merkel added, they ran against the German constitution. Not a great run up to Thursday European summit meeting
Today, the European Central Bank agreed to accept lower-rated asset-backed securities as collateral for loans to European banks. Even after the central bank’s huge provision of cash through its December and February 3-year loan facility, some banks are having trouble funding their operations because they don’t have enough collateral under the former rules to use to secure central bank loans.
Spain sold 2.2 billion euros ($2.77) of bonds this morning. The good news is that total sales were more than the Spanish government had set as a minimum target. The bad news is that yields spiked. SAnd economic data this morning indicates that all of Europe, even Germany, looks headed to recession
