US Ready to Back Bigger EU Stability Fund: Official

US Ready to Back Bigger EU Stability Fund: Official
The United States would be ready to support the extension of the European Financial Stability Facility via an extra commitment of money from the International Monetary Fund, a U.S. official told Reuters on Wednesday.

"There are a lot of people talking about that. I think the European Commission has talked about that," said the U.S. official, commenting on enlarging the 750 billion euro ($980 billion) EU/IMF European stability fund. "It is up to the Europeans. We will certainly support using the IMF in these circumstances."

"There are obviously some severe market problems," said the official, speaking on condition of anonymity. "In May, it was Greece. This is Ireland and Portugal. If there is contagion that's a huge problem for the global economy."

The remarks foreshadow a visit to Europe this week by a U.S. Treasury envoy who is expected to visit Berlin, Madrid and Paris to hold talks on the ramifications of the debt crisis.

more: http://www.cnbc.com/id/40454469

Euro zone's sovereign debt crisis escalates

Euro zone's sovereign debt crisis escalates

Europe Acts to Contain Debt Crisis
 Reassurances Fail to Stem Fears That Woes Will Infect Portugal and Spain; EU-IMF Aim to Wrap Up Irish Aid Package

BERLIN—The euro zone's sovereign debt crisis escalated Friday as the market homed in on Spain as another potential weak spot, leaving officials scrambling to quell investors' fears.

Spanish Prime Minister Jose Luis Rodriguez Zapatero moved to dispel the growing anxiety surrounding the country's fiscal position Friday, saying there was "absolutely" no chance the euro zone's fourth-largest economy would seek a bailout from the European Union. But his attempt to calm the markets had little effect, with the euro tumbling and the selloff in Spanish and Portuguese sovereign bonds continuing.

Europeans Clash on Bailout Zapatero Rules Out Rescue for Spain Ireland's Austerity Fails to Ease Fears Heard: Belgium Is the One to Watch How a Lack of Market Confidence Spreads The Source: The Euro is Totally Fine. Honest. Complete Coverage: Euro Zone Crisis Sovereign Debt Watch "If we continue to see the recent trend in Spanish bond yields then the crisis is going to be taken to a completely new level, as Spain accounts for approximately 11.7% of euro-zone [gross domestic product] which is pretty much double the figure of Ireland, Portugal and Greece [combined]," said Gary Jenkins, head of fixed-income research at Evolution Securities.

MORE: http://online.wsj.com/article/SB10001424052748704693104575638132375883318.html?mod=WSJ_hp_LEFTTopStories

Ireland to Seek EU-Led Bailout as Lenihan Works to Avert Bank `Collapse'

Ireland to Seek EU-Led Bailout as Lenihan Works to Avert Bank `Collapse'


By Joe Brennan and Stephanie Bodoni - Nov 21, 2010 10:54 AM ET
 
Finance Minister Brian Lenihan said Ireland will apply for a bailout as it sets itself up to be the second euro member to seek a rescue from the European Union and the International Monetary Fund.

“I will be proposing to my colleagues that they should formally apply for a program,” Lenihan said in an interview with state broadcaster RTE in Dublin. “The banks were too big a problem for the country. The key issue all the time for the government is to ensure that we do not have a collapse of the banking sector.”

Prime Minister Brian Cowen chairs a cabinet meeting today, and Lenihan wouldn’t say how much Ireland needs, only that it will “certainly not” amount to 100 billion euros ($137 billion). European finance ministers will meet via teleconference starting at 5 p.m. Dublin time to discuss the procedures to be followed once the formal aid request is made, said an EU official with direct knowledge of the talks.

MORE: http://www.bloomberg.com/news/2010-11-21/lenihan-says-he-will-recommend-ireland-should-formally-ask-for-eu-bailout.html

Euro under siege as now Portugal hits panic button

Euro under siege as now Portugal hits panic button

By Bruno Waterfield and Robert Winnett, The Daily Telegraph

Read more: http://www.montrealgazette.com/business/Euro+under+siege+Portugal+hits+panic+button/3831814/story.html#ixzz15RTqDLrZ

The euro is facing an unprecedented crisis after another country indicated on Monday night that it was at a "high risk" of requiring an international bail-out.

Portugal became the latest European nation to admit it was on the brink of seeking help from Brussels after Ireland confirmed it had begun preliminary talks over its debt problems.

Greece also disclosed that its economic problems are even worse than previously thought.

Angela Merkel, the German Chancellor, raised the spectre of the euro collapsing as she warned: "If the euro fails, then Europe fails."

European finance ministers will meet in Brussels on Tuesday to begin discussions over a new European stability plan that is expected to result in billions of pounds being offered to Ireland, Portugal and possibly even Spain.

Read more: http://www.montrealgazette.com/business/Euro+under+siege+Portugal+hits+panic+button/3831814/story.html#ixzz15RTWcnlK

Jim Cramer: Europe to Collapse in 48 Hours – or Never

"If we don’t see total capitulation in Europe over the next two days, Cramer said during Wednesday's Stop Trading!, investors may have to admit that the Continent is “merely” suffering a downturn. Because the repercussions from the expectations of a collapse, which have fed the negativity in the American markets and driven down stocks, can’t continue for much longer without it actually happening."

"psychology of looming collapse”

Greece turns on EU critics

By Kerin Hope in Athens, Quentin Peel in Berlin and Tony Barber in Brussels

http://www.ft.com/cms/s/0/3cfeab9e-1813-11df-91d2-00144feab49a.html

Published: February 12 2010 20:32 Last updated: February 12 2010 20:50

Greece on Friday unleashed a fierce attack on its European Union partners, accusing them of creating a “psychology of looming collapse” a day after they pledged support for the country’s crisis-hit government.

George Papandreou, Greek prime minister, said that, in the eurozone’s first big test, Greece had become “a laboratory animal in the battle between Europe and the markets”.

In a televised address to his cabinet, he criticised EU members for sending “mixed messages about our country . . . that have created a psychology of looming collapse which could be self-fulfilling”.

Mr Papandreou blamed the George Papandreou, Greek prime minister for failing to crack down on the previous conservative government’s “criminal record” in falsifying statistics. “This has undermined the responsibility of the European institutions with international markets,” he said.

His outburst is likely to infuriate the very leaders whose help Mr Papandreou needs. It came as it emerged there would be no more talk of financial assistance until Athens had persuaded the EU that it had a sustainable austerity programme in place.


Deepening slump

Greece’s recession has been deeper than reported, with the fourth quarter of last year seeing another turn for the worse – raising more doubts over whether it can meet its targets of cutting public-sector deficits. Greek gross domestic product contracted by 0.8 per cent in the final three months of last year, by far the sharpest decline reported so far by a eurozone country.

That followed declines of 1 per cent, 0.3 per cent and 0.5 per cent in the first, second and third quarters of the year.

Previous estimates had shown falls of 0.5 per cent, 0.1 per cent and 0.4 per cent. The pace at which Greek GDP dropped last year could also cast doubt on the government’s prediction that GDP will fall by just 0.3 per cent in 2010.

Germany is insisting Athens bears initial responsibility for restoring confidence in Greece. Angela Merkel, German chancellor, resisted French efforts to come up with an explicit bail-out package at Thursday’s summit of EU leaders in Brussels.

Officials in Paris said Ms Merkel’s insistence on additional efforts by Greece to cut its budget deficit came close to thwarting agreement at the summit. According to sources in Athens, she called for a rise in Greek value-added tax of 1 per cent, in addition to extra spending cuts. Herman Van Rompuy, EU president, drafted a compromise before the summit started.

Ms Merkel’s tough stance has overwhelming political and popular support in Germany.

Government officials say they are also constrained by constitutional court rulings, which insist on strict adherence to fiscal and monetary stability criteria in the eurozone .

http://www.ft.com/cms/s/0/3cfeab9e-1813-11df-91d2-00144feab49a.html