Irish Banks Halted on Day of Stress Tests

As the Irish economy reaches an unemployment level of close to 15% and a contraction in its economy of 1.5%, Ireland now faces a crucial point during the countries economic crisis.


Today the country will announce the eagerly awaited bank stress tests. Banking stocks in Ireland and ADRs in American have been halted today ahead of the results.


As the market awaits the result of the stress tests the ten-year government bond yields on Irish debt has surged above 10%. This reflects the fact that the Ireland and Portugal have been unable to finance their short to long term debt in any meaningful for around 12 months.


Upon the release on the stress tests, Ireland will is also expected to announce a 'credible' plan to restructure is economy which is teetering on the brink of a double-dip recession.


To highlight to severity of the Irish banking crisis, Irish Life and Permanent that saw its share price plummet yesterday 45% has a market cap of just over 100m euros but has a staggering 39bn euros of liabilities and loans on its balance sheet and deposits of 19bn euros. This represent a potential shortfall in funding of around 20bn euros

The release of the bank stress test are one of the conditions imposed on the Ireland as a result of the 85bn euro bailout agreed with the EU and IMF last November.


Brokers are expecting a shorfall of between 15-20bn euros, 10bn euros more then originally earmarked by the EU and IMF, but less than the 35bn euros set aside in the bailout package.


Jennifer Hughes, Senior Market Analyst at the Financial Times Short 


View presentation on this > http://video.ft.com/v/870121760001/Periphery-Stress

Investors Distinguish Between Spain and the PIG(S)

Chart courtesy of http://www.ritholtz.com/blog/2011/03/have-you-seen-the-little-piigs/

Looking at the above chart showing the 5yr Credit Default Swaps (CDS) of the so called PIGS nations, it would appear that bond investors have begun to distinguish between Spain and [Portugal, Ireland and Greece].


If you look at the 5yr CDS of Spain, which surged to around 4% back in November is now at much more stable 2% today. This is despite the escalation in the Eurozone sovereign debt crisis this week that culminated in the resignation of the Portuguese premier Jose Socrates after the government lost the latest austerity bill. This is widely expected to result in Portugal requesting a bailout from the European Union European Financial Stability Fund (EFSF).


The Wall Street Journal Reports:


Now that it has become apparent that Portugal will need access to the EFSF, the question now moves to, is Spain next?


If the so called 'bond vigilantes' begin to show concern over the ability of Spain to re-finance its debt this could create an intolerable stain on the Eurozone's finances. 


The estimated costs to bailout the Spanish economy would be approximately 1.1trn euros ($1.56trn). The size of this bailout would dwarf the combined bailout costs of Greece, Portugal and Ireland. This but into the context that the entire EFSF stands at 770bn euros shows the significant problems this would create.


Concerns over the health of the Spanish financial sector were raised again on Thursday as Moody's the credit rating service downgraded 30 Spanish lenders or cajas (savings banks). However on a positive note the two largest Spanish based banks Banco Santander and BBVA avoided the downgrade.


Barclays analyst Antonio Garcia Pascual said "investors increasingly have come to distinguish these countries [Greece, Ireland & Portugal] and Spain. Spain's economic reforms have been praised from as far a field as America when Dallas Fed President Richard Fisher said "Spain's 'financial surgery' is praiseworthy"


Additional points include:

Positives

• Fitch states that Spain's banks property risks are significantly smaller in proportion to its overall economy in comparison to Ireland.
• In the extreme scenario, similar to that seen in Ireland, Spain would be required to raise approximately 100bn euros in additional capital. If this was the case Spain's public debt would jump 10% of GDP to 70%
• Even-though this would be challenging it would not undermine the states solvency.
• Spain's strict and unforgiving home ownership laws that require home owners to accept all liabilities for all their mortgage debt even those that are repossessed, as well as the Spaniards strong attachment to homeownership is a positive for Spanish property market. This results in home owners doing everything they can to keep their homes.
• Spanish economy grew by 0.9% in contrast to that of Greece, Ireland and Portugal
• Spanish exports are also doing better then expected, growing around 16% annually.

Negatives

• Spain's public debt which stands at 9.2% of GDP remains to high for comfort.
• Spain's deficit target of 6% is achievable but might require extra fiscal measures.

Only time will tell whether or not Spain goes the same why as Greece, Ireland and most recently Portugal.

Canada Makes Political History

Canada's Current Prime Minster Stephen Harper
On Friday, the Canadian Conservative government under Prime Minister Stephen Harper has fallen after a defeat in a vote of no confidence. The vote was engineered by the Liberal opposition party after it was alleged that the government was in contempt of parliament. 

Canada's Houses of Parliament

The vote orchestrated by Michael Ignatieff of the Liberal party was won by a 156 to 145 vote. This vote has now set in motion a series of events that will now culminate in a snap election to be held in May.

A parliamentary committee led be the opposition parties found that the Conservative government, specifically Mr Harper had acted in contempt of parliament by failing to disclose the full costs of spending on anti-crime legislation, corporate tax cuts and the purchase of stealth fighters.

Canada's Liberal Party Leader Michael Ignatieff

After the vote Mr Ignatieff was quoted as saying "We want to form an alternative to the Harper government that respects democracy, that respects our institutions, that respects Canadian citizens,"

However Canadian Television has said this is nothing more than politicking, adding it has nothing to do with making the country better.

Polling suggests that in the initial phase of the election campaign the minority Conservative party will have an edge on the Liberal party.

Even-though the opposition party under Mr Ignatieff has sought to exploit this weakness in Conservative party, this may in a turn of irony result in a strengthening of the Conservative if recent polling data is to be believed.

Pollster Ipsos Reid released a survey on Thursday saying that 43% of voters backed the Conservatives. If this is this case it would bring the first majority government under Mr Harper in the 308 seat House of Commons.

Also the Conservatives party has said an election is the last thing the country needs, given Canada has continued to outperform its peers in the industrialised world after the global financial meltdown.

News Sources: 


http://tvnz.co.nz/world-news/canadian-government-falls-election-set-may-4087776


http://www.bbc.co.uk/news/world-us-canada-12865339

Key Points from PIMCOs Latest Cyclical Outlook

PIMCO Cyclical Outlook + Inflation Risks

The U.S. is experiencing a cyclical economic rebound, but its strong durability is uncertain.

Several countries in Europe face headwinds to growth over our cyclical horizon.

Japan’s growth rate will likely fall in the near term, but reconstruction activities should stimulate growth over time.

We expect real economic growth in key emerging economies to remain at a solid rate during 2011, but lower than 2010.

The full report can be found here: 

http://www.pimco.com/Pages/PIMCOCyclicalOutlookUSEconomyGlobalInflationRisks.aspx

Euro Falls as Portuguese Government Rejects Latest Austerity Package

Just as the US markets closed at 20:00gmt, news crossed the wires that the Portuguese government had rejected the latest austerity package increasing pressure on the countries PM to resign. The breaking news from Lisbon sent the euro to its lowest levels of the day as the FXE chart below highlights.

(the FXE is an ETF which tracks the euro against a basket of other currencies)

Source: http://www.ft.com/home/uk

Also Jose Socrates said prior to the vote he would resign if the plan fails to clear parliament, this further escalates both political and economic crisis within the peripheral European nation. Furthermore the resignation of the Portuguese PM would force a snap election. 

All opposition parties voted against the austerity measures as part of the stability and growth program for 2011-2014. Only the ruling socialist party, which has 97 out of 230 seats in parliament voted in favour of the package.

Portugal's finance minister warned, prior to the vote that his country might seek a bailout. Additionally a senior FX trader at ETX capital said “It was only a matter of time before it came to this. The sovereign debt issue had gone quiet over the last couple of months and certainly the last few weeks ... but it was always going to rear its ugly head again,”

As a consequence of this vote, Portugal now the faces the an uncertain economic future as a Eurozone bailout now looms in the foreground. 

The European Financial Stability Fund currently stands at 440bn euros ($705bn)

IISS: Operation Odyssey Dawn - LIBYA

International Institute for Strategic Studies - military hardware in the Mediterranean Sea around Libya as of 23/03/2011

click image to enlarge

http://www.iiss.org/whats-new/iiss-voices/operation-odyssey-dawn-ellamy-harmattan-mobile/

Trading to Resume in Egypt on Wednesday After Lengthy Closure

Nearly two months after the Egyptian stock exchange closed, due to rising political unrest, trading is set to resume on Wednesday.  However, reports from MarketWatch.com have said that one of the consequences of the prolonged closure could be spikes in volatility as investors seek to weigh the risks of two months of political upheaval not only in Egypt but throughout MENA.


A statement issued by the Egyptian PM Essam Sharaf said that market will open for the first time since January 27th, calling on investors to "positively contribute" when the exchange in scheduled to open in several hours.


The Egyptian bourse has been scheduled to open on several occasions in the last few couple of weeks. However with the recent successful election held over the weekend voting in favour of proposed constitutional amendments, it is felt now is the appropriate time to finally reopen the stock market.


One Credit Suisse analyst has been quoted as saying "we expect high volatility in the short term when the market reopens".


There have been several reasons why the market has remained closed for this extended period: - 

1. the overthrow of former President Hosni Mubarak
2. then in early March Sharaf became the Egyptian PM, replacing Ahmed Shafiq who was appointed by the by Mubarak.
3. also decrees prohibiting the flow of funds that were controlled by Hosni Mubarak have been cited as another potential reason for the lengthy closure.

Perhaps the main underlying concern and the primary reason why the markets have reopened sooner is because of the sizeable amount, (approx. 60%) that the domestic retail investors has tied up in the Egyptian stock market. Many of these retail investors have already suffered significant losses prior to the closure of the market.

As an example of how other emerging markets have coped with lengthy stock market closure, one needs to looks at Thailand during its political crisis during 2006-2008. However analysts believe that Egypt's significant exposure to high commodity costs, specifically food prices will also have a negative impact on the market when it reopens.

The government has taken steps to try and reduce the overall volatility that will likely engulf the market once it reopens: - 

1. a shorter trading day for the first week
2. an automatic trading suspension if the market falls 5% or 10% within the same trading day
3. and a 250m Egyptian pound (£26m / $42m) government fund that can be invested in the market. 

Track the movement of the Egyptian Stock Market Here http://www.egyptse.com/English/homepage.aspx

History Repeating Itself: Libya and a Nuclear Meltdown [TIME Magazine]

Time Magazine covers the bombing of Libya and a nuclear meltdown.

You could be forgiven for thinking that the three Time magazines above were published recently, however all three of of the Time Magazines are from the Spring of 1986.

>A CASE OF HISTORY REPEATING ITSELF<

Also a few quotes to ponder over: -

"Those who cannot remember the past are condemned to repeat it.

 - George Santayana, The Life of Reason 1924

"The past is always a rebuke to the present."
- Robert Penn Warren

History teaches everything including the future.
- Lamartine

"Whoever wishes to foresee the future must consult the past; for human events ever resemble those of preceding times. This arises from the fact that they are produced by men who ever have been, and ever shall be, animated by the same passions, and thus they necessarily have the same results."
- Machiavelli

History repeats itself, first as tragedy, second as farce

- Karl Marx

Time magazine covers taken from: http://www.time.com/time/archive/

The Domino Effect in the Middle East - Who Will Fall Next?

Graphic Courtesy of the National Post

Click to enlarge

Away from Libya... Tensions Rise Throughout the Middle East

As the world focuses its attention on the escalating crisis in Libya, the crisis deepens in Yemen & Bahrain. Additionally sporadic anti-government protests have been seen in Syria earlier today.


Syria:

In what has been seen as the the first major show of discontentment with the Syrian government, specifically Bashar al-Assad, protests erupted throughout the country today. In the southern city of Daraa where the most significant anti-government protests took place, violent clashes broke out between the protesters and Syrian security services.


In Daraa today, 3 people were killed and many more wounded. Responding to these reports Ban Ki-moon the UN Secretary General, described the violent & deadly crackdown on protesters as unacceptable. The UN Secretary General said he "urges the Syrian authorities to refrain from violence and to abide by their international commitments regarding human rights which guarantee the freedom of opinion and expression, including the freedom of the press and the right to peaceful assembly."


The protesters in the Syrian city were said to be chanting "God, Syria, Freedom" while accusing Bashar al-Assad and his family of corruption.

Yemen:

Meanwhile in Yemen, the President has announced a state-of-emergency as dozens are killed on the most violent day of protests to date.

Ali-Abdullah Saleh declared a state of emergency on the day when over 40 people were killed as a result of a brutal government crackdown on protesters in the capital Sanaa. Abdullah Saleh said the state of emergency was declared by the countries national security council. 

The state of emergency has been put into place across the entire country, additionally a curfew is set upon armed people in all Yemeni provinces, the security forces will take responsibility for the enacting the curfew.

Witnesses also reported that pro-government thugs also opened fire on protesters in the university square in the capital as they fight for democratic reforms and ultimately the removal of Abdullah Saleh from power.

Bahrain:

Today was a sad moment for the pro-democracy forces in Manama as the symbolic monument, and gathering point for the protesters was torn down by government workers in an attempt to quash future protests.

Before and After images of the statue at Pearl Roundabout in the Capital Manama 

This move comes after dramatic week in Bahrain, that saw Saudi Arabia send its national guard to bolster government forces and to help regain control of the country.


Saudi forces have been sent after weeks of protests by Shia majority that have crippled the countries economy and brought about sectarian violence.


On Friday, Bahrain's foreign minister Ahmed al-Khalifa said the government remained committed to talks with the opposition, but said that security was the top priority. He also said that 3 or 4 gulf states would be sending forces until stability were restored, however this will inevitably add to anger and frustration amongst Shia majority. Additionally, this potentially adds fuel to fire and may further inflame the situation.

24 Hours After the UNSC Voted for a No-Fly Zone - Gaddafi Breaches International Demands

Just hours after Barack Obama said the Libyan leader would suffer the consequences of international military action if he did not comply with the United Nations Security Council Resolution (UNSCR), Gaddifi's forces have been reported making fresh moves on the rebel stronghold of Benghazi.


This also contradicts reports earlier in the day from the Libyan government officials saying they had called for a ceasefire, and also opening the door for possible negotiations.


Meanwhile rebel forces in the western held city of Misrata have said they have faced a day of heavy bombing. This if the case goes directly against the UNSCR adopted last night in New York.


Obama in a press conference said "all attacks against civilians must stop". Furthermore, the President added that Libyan forces must retreat from the western cities of Zawiyah & Misrata as well as the eastern city of Ajdabiya.

Heightening the rhetoric between the two countries Barack Obama also added that the terms laid out in the UNSCR were "non-negotiable" adding "if Gaddafi does not comply...the resolution will be enforced through military action. Obama also took this moment to stress no ground forces would be deployed.


Giving credence to this Reuters report, in Washington a national security official said Gaddafi troops movements on Benghazi were "purposeful". Susan Rice, the United States ambassador to the UN responded to the question "is Gaddafi in violation of the resolution?" said "yes, he is".

Libya: The No-Fly Zone in Practice - Sky News Demonstrates

Libya's No-Fly Zone: What Does it Mean? - Sky News Reports

UN Security Council Vote Results (17/03/2011)

Countries highlighted in blue are abstentions 

Egypt to Assist Rebels in Libya: WSJ Reports

The Wall Street Journal Reports:


The WSJ has reported in the last few hours that Egypt has begun supplying the rebel forces in Libya around the same time that UN Security Council voted in favour of a no-fly zone over Libya. 


The shipments, so far appear to be small arms in the form of assault rifles and ammunition. This 11th hour intervention by Egypt provides much needed support to the rebel forces who over the last week have been losing ground to the better armed, better trained Gaddafi forces.

Source: http://www.cartoonaday.com/muammar-gaddafi-thrown-out-cartoon/

Arab states unwillingness to act on behalf on the Libyan rebels has been both a source of frustration and division between them and western governments.  Tonight's action by Egypt comes on the back of an unusually strong diplomatic response to this escalating crisis as the 23 member Arab League voted in favour of a no-fly zone over Libya.


As a direct result of this vote by the Arab League, Britain and France were given a much needed diplomatic boost in their bid to put a no-fly zone into place. Initially the talk of a no-fly zone by David Cameron the British Prime Minister three weeks ago was slapped down by the US Secretary of Defence Robert Gates as "loose talk".


Lebanon was the linchpin in establishing the necessary framework for the UN resolution which called for "all necessary means" to force a ban on flights over Libya. Additional Arab support came from the UAE and Qatar who have taken a lead in enforcing a no-fly zone according to UN diplomats.


In recent days, Egyptian and Qatari flags have been flown in the rebel held town of Benghazi in a clear show of appreciation for the support been offered by the two countries in their hour of need. The US appears to turning a blind eye to the military support been offered by Egypt as one US official put it "there's no formal US policy or acknowledgement of what is going on", adding "it is something that we are aware of."


Due to after-effects of the war in Iraq and the ongoing war in Afghanistan, as well as continued public distrust in the Arab region and at home, the US has been reluctant to get directly involved in the crisis in the Middle East.


However the US has stated clearly in public that it wants Gaddafi out and has signalled it would support those offering help to the rebels militarily or otherwise.


The UN resolution has now, potentially put the final nail in the coffin, as far as Gaddafi's grip on power is concerned.

Source: http://www.cartoonaday.com/muammar-gaddafi-thrown-out-cartoon/

UN Votes for Libya No-Fly Zone: Al-Jazeera Arabic Reports Celebrations in Benghazi

Just moments ago the UN Security Council Voted in favour of upholding a no-fly zone.


Voting resulted in 10 for, 0 against & 5 abstentions (Russia, China, India, Germany and Brazil) The resolution was co-sponsored by France, Britain, Lebanon and United States 

Al-Jazeera Arabic reports that anti-Gaddafi protesters in the rebel stronghold on Benghazi celebrated as the resolution was passed by the UN Security Council in New York

For the complete text of the UN Security Council 

click > http://www.ft.com/cms/s/0/7387c938-50e9-11e0-8931-00144feab49a.html#axzz1GnxEagrm

Japan's Nuclear Crisis: Video Analysis - CNBC & IAEA

Source: http://www.nucleartourist.com/world/japan.htm

Squawk on the Street: CNBC

IAEA: Fukushima Daiichi Nuclear Power Plant, Before & After

For continuing analysis and updates on the Japanese Nuclear Crisis from the IAEA 

(Click the link > http://www.iaea.org/)

As Gaddafi's Forces Edge Closer to Benghazi - UN to Vote on No-Fly Zone

As Al-Jazeera reports fresh air strikes in the rebel stronghold of Benghazi - the UN prepares to vote on a No-Fly Zone over Libya this afternoon (17/03/2011).

OECD Downgrades UK Growth Forecast as Unemployment Rate Hits 17-year High

The OECD yesterday downgraded UK growth forecast saying "economic growth will be subdued this year and next...". Adding "the government must continue its difficult fiscal consolidation and structual reform programmes to return the economy to a sustainable path.

The OECD also said that the "spending cuts will curb government consumption, investment and household growth throughout 2011-2012. However on a positive not the OECD went on to say that this would bring long-term gain. 

"The OECD says that pushing through key reforms will address fiscal sustainability concerns and help bring about a long-term rebalancing of the UK economy. 

 1. The shaded area indicates the maximum and the minimum among the seven major OECD countries.
Source: OECD, OECD Economic Outlook database.


As can be seen by this data chart from the OECD, the UK GDP growth lags significantly behind its OECD counterparts. Furthermore CPI inflation will also have a negative impact on the consumer going forward as companies will continue to push prices onto its customers. Not to mention soaring oil prices, which will further dent consumer confidence as they cut spending in other areas as they spend more money at the pump.
On the plus side for the UK economy, is that the current unemployment rate stands at 8% slightly below the OECD average. Yesterday, however saw the UK unemployment rate hit a 17-year high after an increase in unemployment of 27,000 in January to 2.53million. Oddly on the same day the ONS released figures showing that the number of people claiming jobseeker's allowance fell by 10,200 to 1.45 million.

OECD Report on the UK Economy

Stephen Roach Questions the Sustainability of the Global Recovery on Bloomberg TV

"The Last Word" with Andrea Catherwood on Bloomberg TV

Nikkei to Remain Closed Citing Volatility: Reuters Reports

(Reuters) - Some foreign financial institutions are calling for Japan's stock market to halt trading, while the Tokyo Stock Exchange and Japanese financial regulators are planning to keep markets open, news agency Nikkei reported.


The report said that foreign firms were looking for a trading halt because the "market was experiencing too much volatility," but did not elaborate.

The scale of volatility can be seen clearly in this three day chart of the Nikkei 225. 

US equity market have also experienced a surge in volatility over the same three day period. The chart below shows a massive 40% spike in the VIX volatility index - better know as the fear gauge for Wall Street

The currency market also seen extreme volatility, especially in the last several hours as the FT reports.

"The yen breached its record high from April 1995 of Y79.70 versus the dollar as traders continue to bet that the Japanese unit is likely to see buying from the repatriation of funds. The yen’s gains accelerated once the previous high was broken, and surged within minutes to Y76.36. Traders were seemingly not worried by the threat of Japanese currency intervention."

Sudan: A Divided Country on the Brink

Source: http://www.daylife.com/photo/0fiug5WaoT8g9


A senior official based in southern Sudan as accused the current Sudanese President Omar al-Bahir of plotting to overthrow the government of the south.

Pagan Amum (pictured above) has said the south's ruling People's Liberation Movement (SPLM) has details of a plan by al-Bahir's National Congress Party (NCP). This comes amid an escalation in violence between forces in the north and the south with the most recent skirmish taking place in the oil town Malakal, in the upper Nile. This was carried out by George Athor a leading General of the rebel militia forces.

Additionally Amum has also said that the NCP has been creating, supplying and training armed militia groups in southern Sudan with the aim of overthrowing the government before July.

Southern Sudan is to declare is independence in July following January's referendum. The people of southern Sudan voted overwhelmingly in favour of partitioning the country by 99%.

Sudan's arid northern regions are home mainly to Arabic-speaking Muslims. But in Southern Sudan there is no dominant culture. The Dinkas and the Nuers are the largest of more than 200 ethnic groups, each with its own traditional beliefs and languages. 

(taken from: http://www.bbc.co.uk/news/world-africa-12111730)

Responding to accusations from Amum, an official from the north said that reports of plots to overthrow the government in south were 'ridiculous'. 

General Athor, went into rebellion after losing the election last April and fears are growing that this recent escalation in violence could threaten the south's independence before it has chance to take hold.

Map source: http://www.bbc.co.uk/news/world-africa-12111730

A Sign of the Times: Libyan Relations: Then & Now

This excellent graphic is courtesy of Channel 4

As Ras Lanuf Falls, The Arab League Back Calls for a No-Fly Zone

Rebels retreat: Smoke billows from a burning oil refinery behind an abandoned rebel rocket position on a road leading to the flashpoint Libyan town of Ras Lanuf. Source: AFP

The Arab league on the same day Gaddafi loyalists have re-taken control of the oil town of town of Ras Lanuf have back plans for a no-fly zone over Libya. This according to reports from the New York Times

Al-Jazeera has also reported that rebel forces appear to in wide-spread retreat, Gaddafi forces also appear to advance to Benghazi, an opposition stronghold.

The Washington Post has also reported that 2 US warships have crossed the Suez Canal en route the Mediterranean sea, which would place them close to Libyan territory.


Events seem to be moving rapidly in this ongoing crisis, with the possibility of a no-fly zone edging ever closer. If a no-fly zone is adopted by either NATO or the UN then they would effectively be at war with Libya. The reason for this is because one of the first actions of military forces would be to bomb Libyan air defences, thus invading their air space and violating the countries sovereignty. 

The Military Balance (Rebel v Gaddafi Forces) BBC Reports

http://www.bbc.co.uk/news/world-africa-12692068

Saudi Price Alwaleed Speaks Candidly on CNBC - Excellent Interview with Maria Bartiromo

"Closing Bell" with Maria Bartiromo on CNBC - Interview with Prince Alwaleed bin Talal al Saud

 

Discussion points included: - 

1. Saudi Arabia's "day of rage"
2. Ongoing unrest in the Middle East and the need for reform
3. Oil production
4. His investment in Citigroup (largest shareholder)

Price Alwaleed's Profile:

http://www.arabianbusiness.com/arabian-business-rich-list-2010-367763.html?view=profile&itemid=367773

440bn Euros, 17 Governments, 1 Summit, 1 Economic Union = 1 Deal

Breaking News - FT

The Financial Times has released details of a surprise breakthrough in negotiations surrounding the Eurozone's debt crisis

A deal has been reached between the Eurozone's 17 governments in order to prevent further deterioration in the Eurozone's finances. 

Some of the key points are laid out below: -

1. the leaders of the 17 governments agreed to give more financial backing to the 440bn euro rescue fund
2. they also agreed to a plan to buy sovereign bonds from struggling governments when they are initially auctioned, with one stipulation "they must enter into a fiscal austerity program along similar lines to the bail-out terms laid out previously.

• this would allow participating governments the ability to finance their debt much lower interests rates in comparison to what they would get on the open markets.

Not to get to carried away with the success of this deal, Angela Merkel was quick to point out "It wont make a huge difference".

The only part of the deal not agreed was a cut in interest payments been paid by the Irish government. The reason for this was because the newly elected Irish government refuse to cede ground on a hike in their corporate tax rate. This has been a been a major source of contention between the Irish on one side and France & Germany on the other. (see previous post earlier this week for details)


Although the total size of the fund is 440bn euros, in order to maintain funds AAA credit rating it can only lend out 250bn of the 440bn euros.


On a positive end note Herman van Rompuy said "everything will come together at the European Council at the end of March". Adding "this should finally allow us to turn a corner".


http://www.ft.com/cms/s/0/bf3ef3c8-4c49-11e0-82df-00144feab49a.html?ftcamp=rss#axzz1GLhS481l