- First drafts of the new governance procedures are circulating, and undershoot even the lowest expectations.
- No real agenda on economic governance, except stronger sanctions;
- Ecofin likely to agree on European stability fund, after France and Germany finally agreed;
- Funds will be lend at market conditions, no authorisation required from national parliaments;
- Also today, Angela Merkel and Nicolas Sarkozy are to stitch up their differences over diner in Berlin tonight;
- Germany close to agreement on austerity programme with severe cuts in public spending;
- G20 supports drive for austerity;
- Euro fell under $1.20 amid fears that debt crisis spread throughout Europe;
- Paul Krugman predicts lost decade for the world economy;
- Angela Merkel might not get her presidential candidate through;
- Wolfgang Munchau argues that central bank transparency has become crucial once again;
- The procedure for enhanced cooperation, meanwhile, has been evoked for the first time, not by finance ministers but by justice ministers for common rules on divorce.
Eurointelligence Syndicated Column
GFC to GSC – Part 2: Nowhere to Run To, Nowhere to Hide
By: Satyajit Das
The GSC has profoundly shifted economic dynamics. Refusing to acknowledge the real problems, major economies have over a period of two decades transferred debt from companies to consumers and finally onto public balance sheets. A huge amount of assets and risk now is held by central banks and governments, which are not designed for such long-term ownership. There are now no more balance sheets that can be leveraged to support the current levels of debt.
This is the Daily Briefing from www.eurointelligence.com