Reference: Frankfurter Allgemeine Zeitung.
The EU commission has taken a leadership role in the ongoing economic and banking crisis, not so much by choice as by default – the EU commission is after all the nearest thing EU has to an executive function.
Today the annual report card was read aloud – so everybody could really gloat.
About the only one that got a pad on the head was Germany (teacher’s pet!), but together with Hungary some severe admonishments from 2009 were rescinded as proper rue and improvement had come forward.
Twelve countries: Spain, France, Italy, Finland, Belgium, Slovenia, Cyprus, Bulgaria, Denmark, Sweden, Great Britain – and yet again Hungary – became detailed recommendations as to how to improve competitiveness.
And yes – apparently Spain was given a restricted indulgence – in view of their unfortunate childhood: An extra year of grace before balancing the deficit.
As to Greece: The hands were folded in solemn prayer and mournful headshaking.
This role as a schoolmaster flexing the cane – is comparatively new brought on by necessity.
But the real bomb at this end of term status was:
Chairman Barroso spoke for the first time of a proposal for a Bank Union in view of the tangled web of the financial world.
Barroso did not get into specifics.
One thing is that the Euro-zone members should cooperate – by necessity of having a common currency – but there are rather large non-Euro countries. This is not going to sit well with the Euro-skeptics in the various countries. Cameron from the UK must be absolutely livid.
The Guardian mentions that the British economy is in suspended animation – as if that could surprise; but fails to mention Barroso’s remark.
“Commission president Jose Manuel Barroso told a news conference that tighter euro zone integration could include a banking union, a joint bank deposit guarantee scheme and euro area financial supervision, saying the mood had changed since member states only months ago unanimously rejected a joint deposit guarantee fund.”
“In the same vein, to sever the link between banks and the sovereigns, direct recapitalisation by the ESM (European Stability Mechanism) might be envisaged,” the report said.
EU paymaster Germany has so far firmly opposed any collective European banking resolution and guarantee system and any use of bailout funds without a country having to submit to a politically humiliating EU-IMF austerity programme.
Spain’s banking woes – the result of a burst property bubble aggravated by recession – have combined with growing uncertainty about Greece’s survival in the euro zone to reignite Europe’s sovereign debt crisis.
In a sign of heightened anxiety in Washington, top US treasury official Lael Brainard was despatched to hold talks in Greece, Germany, Spain and France “to discuss their plans for achieving economic stability and growth in Europe”, the treasury department said.
The Economy Ministry played down a Financial Times report that the European Central Bank had rejected an initial plan to rescue Bankia, Spain’s fourth biggest bank, by stuffing it with government bonds that could be used as collateral to borrow from the ECB.
“Spain did not formulate any proposal to the ECB on funding the Bankia plan, so it was difficult for it to have an opinion,” a ministry spokeswoman told Reuters. “The Economy Ministry maintains as a first option to go to the markets to recapitalise the entity.”
The Frankfurter Allgemeine Zeitung, an influential voice in the conservative German financial establishment, said that by considering such “tricks”, Spain was provoking the market distrust it sought to avoid at all costs.