Eurointelligence Daily Briefing, 26 de Abril de 2012. Enviado por Domenico Mario Nuti.

According to Süddeutsche Zeitung the ECB and several euro states are preparing to form a working group in the next weeks to prepare proposals to enable the EFSF/ESM to directly lend money to troubled banks. The aim is to avoid that a whole country has to request a program with the rescue funds in order to help its ailing banks. The reason for hurry is the deteriorating situation in Spain and the worry that there may be contagion to other euro countries. „Once Spain is under the rescue umbrella the markets will concentrate on Italy“, the paper quotes an unnamed source. Until now the fund’s rules clearly state that it can only lend to governments in return for a program with strict conditionality. Germany, Austria, Finnland and the Netherlands insist that this rule be kept.

 

After fiscal compact Draghi calls for growth compact

 

 

After having initiated the fiscal compact past December Mario Draghi yesterday called for a growth compact in his hearing at the European Parliament, Financial Times Deutschland reports. „We’ve had a fiscal compact. Right now what is most present in my mind is to have a growth compact“, he said. The ECB president did not spell out any details but the German board member Jörg Asmussen told the paper: „The unchanged fiscal pact could be complemented by growth enhancing measures on the level of member states or the eurozone“. According to Asmussen one option would be to redirect money from the EU’s structural or regional funds to program countries so that it could enhance jobs there. Another option would be labour market reforms as the Agenda 2000 had shown in Germany. „It is important not to soften the fiscal pact, but to strengthen it“. FTD interprets the ECB’s proposal as a further sign that Angela Merkel’s consolidiation first approach is getting increasingly contested. The German government was on the defensive yesterday with deputy finance minister Thomas Steffen insisting that in government there were no „consolidation taliban“.

 

Hollande to propose his pro-growth initiative

 

 

With his appeal for a growth compact Mario Draghi launched a European wide debate on pro growth policies, Les Echos writes in ist leading front page story. In an interview with Les Echos Jean-Marc Ayrault, the Socialist’s current chief whip and a potential future prime minister, points out the isolation of Angela Merkel in her resistance to complementing the fiscal pact with pro growth measures. „How much longer will Germany be able to stick to this position?“, he asks. „She is isolated“.

 

 

In a press conference Francois Hollande yesterday announced that once elected he would quickly send a memorandum with four points to his European partners, Le Figaro reports. First he would ask for the creation of eurobonds earmarked to finance infrastructure projects. Second he would ask that the EIB’s possibilities to finance European projects should be „liberated“. Third he would ask for the introduction of a financial transacation tax together with those countries willing to introduce them. Fourth he would ask to for all money not used in the EU’s structural funds to be employed for growth enhancement.

 

 

According to Michel Sapin, one of his senior advisers, Francois Hollande is not seeking to unpick the European fiscal pact but wants to complete it with tools to promote economic growth. “What concerns us is not what is in the treaty, it is what is not in the treaty,” Sapin told the FT in an interview. Francois Hollande said yesterday that Germany had to accept a European growth pact as it was the only way to solve the eurozone crisis, writes the FT.

 

Hollande and Draghi mean different things when they talk about growth

 

 

Mark Schieritz on Herdentrieb  finds that Draghi’s proposal is not a deviation from the austerity thrive, but its complement. It is essentially about structural reforms, i.e. more of the same. It will not stimulate growth in the short run. When Mario Draghi or Angela Merkel talk about a growth compact they mean something different than Francois Hollande and Christine Lagarde.

 

Sarkozy under pressure after comments that Le Pen was compatible with the principles of the republic

 

 

Nicolas Sarkozy came under pressure yesterday after Libération reveiled that he had said that the extreme right candidate Marine Le Pen were compatible with the principles of the republic, Le Monde reports. Sarkozy first denied he ever said that but then tv footage with the sentences quoted by Libération proved him wrong. In a front page editorial Le Monde warned the incumbent president and candidate that in his attempts to court the 18% who had voted for Le Pen „the end does not justify all means“.

 

Rösler and Bundesbank urges ECB to exit loose monetary policy

 

 

The German economics minister and liberal FDP party chairman urged the ECB to exit its loose monetary policy. „Rising prices could become a risk fort he upswing“, he said presenting the government’s economic forecasts according to Reuters. „The ECB has our support in order to return to the normal monetary policy stance and to concentrate on ist mandate which is price stability“. Seperately Bundesbank board member Andreas Dombredt also asked for the ECB to return to normality in its monetary policy.

 

Christian democrats agree on minimum wage

 

 

Angela Merkel’s CDU and the Bavarian sister party CSU yesterday agreed on the principles of a general minimum wage for Germany, Frankfurter Allgemeine Zeitung reports. According to the plans the minimum wage which the two parties call the „lower wage limit“ shall apply to all sectors which do not have any collective wage bargaining agreements. An independant commission will be charged with fixing the level of the minimum wage. Awkwardly collective wage bargaining agreements that foresee wages below the minimum wage shall nevertheless stay valid. According to the paper it is unclear whether the christian democrat’s plans will ever become government policy because Merkel’s liberal FDP coalition partner vehemently opposes minimum wages. The president of the German employer’s federation BDA Dieter Hundt criticized the plan and said that examples in other European countries with minimum wages proved that they contributed to definitively shut out long term unemployed and young people from the labour market.

 

Laidi: Sarkozy’s failure is due to lack of strategy and action

 

 

In the FT Zaki Laidi writes that Sarkozy’s lack of political coherence and strategic vision is the reason why he is the first incumbent French president to trail in second place after the first round of voting. He writes “While the French are willing to elect a monarchical president, in exchange they expect him to wear a royal mantle of distance and levelheadedness that they might turn to in difficult times.” Sarkozy became embroiled in all problems and yet led only to a few actions. “Mr Sarkozy’s political decline reflects both his personal failings and the failure of his policies. It is also the collective expression of France’s struggle to develop a new political identity in response to globalisation.”

 

Venizelos suggests three party coalition

 

Kathimerini reports that PASOK chief Evangelos Venizelos said there would be a “huge problem” if the next government — most likely to be a coalition — does not have at least 50 % of the vote. Venizelos said three parties may need to join forces in a coalition government after the May 6 polls. Last week’s Public Issue survey indicated that PASOK and New Democracy would get a combined share of the vote totaling 35.5%, which could be enough for a slim parliamentary majority. But a possible third coalition partner has not been forthcoming so far.

 

IMF says Spanish banks need public money

 

 

El Pais reports on the IMF’s stress test of Spanish banks, which calls for more public money to recapitalise the sector. The IMF says that 10 state-supported Spanish banks and cajas, though the largest banks are sufficiently solid to withstand shocks.  The article says the IMF did not, however, criticise the quality of bnak supervision.

 

German tourists boycott Greece

 

 

Reuters has a well-researched story from Corinth, Greece, which says German tourists have been avoiding Greece, fearing anti-German reprisals. The absence of Germans is notable in the tourist hotspots like Corinth. The lack of German tourist is significant because tourism accounts for 15% of GDP (the export sector is less than half of that), with Germans traditionally constituting the largest tourist group in the country. The article quotes an estimate that overall tourism revenues are expected to fall 5% this year. Data for the main summer holiday season shows pre-bookings from Germany down by some 30%. (Tourism has been one of the few hopes for Greece, and this really bad news. The Greek tourism industry has not regained competitiveness, and it will take a few years until the Germans return.)

 

 

10-Y Spreads, Forex, ZC Swaps and Euribor-Ois
10-year spreads
	Previous day	Yesterday	This Morning
France	1.420	1.342	1.256
Italy	4.065	4.079	3.986
Spain	4.256	4.158	4.127
Portugal	10.043	9.765	9.934
Greece	19.927	19.838	#VALUE!
Ireland	5.274	5.222	5.341
Belgium	1.933	1.852	1.798
Bund Yield	1.62	1.659	1.752
Euro Bilateral Exchange Rate
	Previous	This morning
Dollar	1.319	1.3222
Yen	107.370	107.29
Pound	0.818	0.8178
Swiss Franc	1.202	1.2015
ZC Inflation Swaps
	previous	last close
1 yr	2.02	1.93
2 yr	1.96	1.94
5 yr	1.83	1.82
10 yr	2.06	2.18
Euribor-OIS Spread
	previous	last close
1 Week	-7.600	-7.5
1 Month	-1.786	-1.786
3 Months	28.886	30.786
1 Year	100.564	100.964
Source: Reuters