Date: Monday 25 Jun 2012
-German referendum on further EU integration possible-Der Spiegel
-Soros believes Greece will not be able to meet austerity targets
-German FM tells Greece to get on with reforms
Stoxx 600: -1.03%
Ibex 35: -2.56%
European equity benchmarks are now trading a bit lower than this morning, given investors´ poor expectations regarding the EU summit at the end of the week and with the crisis in Greece and Spain not far from investors´ minds. That on a day in which the economic calendar is rather light.
Simply put, Germany seems to be open to more medium-term solutions, while wary of what it perceives as short-term fixes. However, given the pressure markets are bringing to bear on Spain it may not have the luxury of time. Furthermore, and Spain apart, there are those who believe that calls for excessive austerity may have had unwanted consequences. On the other hand, in its annual report out yesterday the Bank for International Settlements (BIS) says that central banks are being ‘cornered’ into undertaking excessively lax monetary policies.
According to a document prepared for the June 28-29 meeting, European leaders will discuss specific steps towards a cross-border banking union, closer fiscal integration and the possibility of a debt redemption fund, Reuters is reporting. Investors, nonetheless, are still at a loss over how authorities will try to severe the link between banks´ and sovereigns´debts. As well, in the last few days however German chancellor Angela Merkel has reaffirmed her opposition to any sort of debt mutualisation.
Meantime, and as regards Greece, German Finance Minister Wolfgang Schaeuble has told the country that it should get on with the reforms that it promised to carry out instead of asking what else others scan do for it.
As well, the above comes after the Bundesbank´s criticism of the European Central bank´s decision, last Friday, to ease collateral requirements for periphery banks in a bid to ease financial market tensions.
On a possibly more positive note, German Finance Minister, Wolfgang Schaeuble, told Der Spiegel this weekend that he can see a referendum being held in Germany on further Eurozone political integration, which may lay the ground work –it is understood- for some of the economic measures Southern Europe is pressing for.
Likewise, some observers have been calling attention recently to proposals from Germany´s own council of economic experts for limited forms of debt mutualisation.
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