Schaeuble Rejects Trichet Criticism of Crisis Plan to Penalize Bondholders
By Patrick Donahue - Nov 5, 2010 11:40 AM GMT+0100 Fri Nov 05 10:40:51 GMT 2010
German Finance Minister
Wolfgang Schaeuble rejected European Central Bank President
Jean-Claude Trichet’s criticism that plans to make investors pay for future crises risk roiling financial markets.
“I don’t share the argument that the markets will be unsettled,” Schaeuble said in a speech in Berlin today. “The markets know that it’s necessary.”
Trichet signaled his concern yesterday that any attempt to make bondholders contribute in the event of another debt crisis risks driving up the borrowing costs of high-deficit nations such as Ireland and Greece. Spanish and Irish bonds fell today.
Trichet’s “argument against a crisis mechanism is that it will worsen the European competitive position for investors,” Schaeuble said. “My argument is that this has long been taken into consideration by markets and priced in.”
Chancellor
Angela Merkel’s government this week stepped up its insistence that bondholders rather than taxpayers are held to account as it tries to put its stamp on a European Union permanent debt-crisis procedure, which is to be drafted by mid- December.
Merkel, whose coalition trails the opposition in opinion polls before six state elections next year, needs a success after alienating German voters by supporting the bailout for Greece in May,
Carsten Brzeski, a senior economist at ING Groep NV in Brussels, said in a phone interview. Her refusal to cut taxes even as revenue jumps also contributes to her stance on the debt mechanism, he said.
Merkel ‘Needs This’
“You cannot go around saying ‘All German citizens have to be austere while we bail out the Greeks’,” said Brzeski, who used to work at the European Commission, the EU’s executive body. “The crisis resolution mechanism has to fly,” he said. “To present herself as a powerful European figure, she needs this success now.”
German attempts to shape the rule overhaul risk have been challenged by European leaders including Spanish Prime Minister
Jose Luis Rodriguez Zapatero, who are concerned that telling bond investors they will have to shoulder part of any future bailout will spook traders at a time when Ireland and Portugal are struggling to cut their budget deficits.
The extra yield investors demand to hold Spanish 10-year bonds instead of similar-maturity German securities surpassed 200 basis points today, leading spread widening among so-called peripheral bond markets in Europe.
The Spanish spread was nine basis points higher at 204 basis points as of 8:53 a.m. in London, the most since July 14, based on closing generic prices. The Irish spread widened four basis points to a record 530 basis points.
“It’s not helpful to suggest Europe is going to restructure other countries’ debts,” Irish Finance Minister
Brian Lenihan told reporters on Nov. 3, attributing the widening bond spreads to talk of forcing bondholders to accept losses. “Ireland has made it very clear we’ll honor our debt and obligations. There is no question of restructuring our debt.”
(Bloomberg)
mentre un rinvio delle decisioni da prendere su questo aspetto ad un prossimo incontro fra leader europei ad inizio 2011, ad esempio, sarebbe invece piuttosto salutare...
ma l'ottica voleva essere semmai di tipo speculativo
