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Today’s News from Europe: Italy, Greece in disarray; U.K. and France adjusting; Eurozone finance ministers meet again

November 7, 2011

Morning Update:
“The negotiations between George Papandreou and Antonis Samarasover Greece’s new unity government resume this morning, with the name of the next prime minister expected to be announced before the end of the day.
We are expecting details of French austerity measures – reports over the weekend suggest €8bn of cuts/tax hikes. The announcement is expected at 11am. The cuts come on top of €12bn of savings announced only three months ago.
The eurozone’s finance ministers are meeting in Brussels later today to agree the technical details of the operation of the ramped-up €440bn EFSF.
The Italian centre-left opposition is preparing a vote of no confidence in prime minister Silvio Berlusconi. The media mogul faces a difficult vote tomorrow on the public finances – we will be following developments today ahead of that vote.
The Eurozone Sentix index, an indication of investor sentiment in the Eurozone, is out at 9:30am GMT.
There are few big US corporate announcements this week. Cisco reports on Wednesday and Disney on Thursday, but we will as ever have an eye on the US markets to see how events in the eurozone are impacting globally.
Evening Summary:
• Silvio Berlusconi is clinging to power. Italy’s prime minister has vowed to win a vote on the public accounts tomorrow, followed by a confidence vote – but details remain vague
• Fears over Italy drove its borrowing costs to euro-era record highs. The yield on Italian 10-year bonds hit 6.69%
• Talks continue in Greece tonight over the formation of a unity government. Lucas Papademos remains the favourite to become prime minister, but is said to be taking a tough line in negotiations.
• Eurozone finance ministers are meeting tonight to discuss the crisis. Germany is under huge pressure to allow the European Central Bank to play a wider role.
• David Cameron urged Europe to deliver on its promises. “Sort yourself out and then we will help” said the prime minister, as George Soros warned that Europe faces a lost decade.
• France announced more austerity. An extra €7bn of tax rises and spending cuts are meant to keep its deficit reduction plan on track
Thanks for reading, and for the hundreds of comments – they’re really helping us to cover this crisis.

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Italy’s Prime Minister Berlusconi refuses an IMF bailout and refuses to resign

November 7, 2011

“Defiant Italian prime minister Silvio Berlusconi today refused an offer of financial support from the IMF – and insisted he would not resign. The 75-year-old leader insisted he did not think his coalition government would collapse as they struggle to deal with their debt crisis.

With its colossal £1.6trillion debt, Italy is now at the eye of the storm and is paying 6.43 per cent to borrow money for ten years. That figure is perilously close to the 7 per cent level where Greece, Ireland and Portugal were forced to seek a bailout.

But rejecting IMF help the Italian leader said at the end of the two-day G20 summit in Cannes: ‘We don’t believe this type of intervention is necessary.’ Italy has built up debts 120 per cent bigger than national income. Its fate is crucial to the eurozone, because its economy – the third-largest in the currency union – would be too expensive to bail out like Greece, Portugal and Ireland have been.

Berlusconi earlier agreed to allow the IMF to monitor its progress in carrying through reforms whose delay has sapped market confidence in Italy and ravaged its government bonds.

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G-20 fails to reach an agreement on IMF assistance for the European debt crisis

November 6, 2011

“World leaders balked at writing new checks to help bail out the euro-area, demanding its own governments first do more to fix the two-year-old debt crisis.

Global policy makers demanded more details of a week-old rescue package before they commit fresh cash to the International Monetary Fund, which could then lend to Europe’s bailout facility, German Chancellor Angela Merkel said at the end of a Group of 20 summit in Cannes, France. French President Nicolas Sarkozy said a deal may not come before February.”

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IMF Chief Lagarde has chosen Russia, China, & Japan as first countries to visit outside of the European Union since her term began in July

November 3, 2011

“International Monetary Fund chief Christine Lagarde has chosen Russia, China and Japan as the first countries outside the European Union to visit since taking office in July, an IMF spokesman said Thursday.

The trip comes as all three countries have expressed interest in providing financial assistance to Europe, but under the IMF’s guide or oversight, as a part of the EU plan to resolve the public debt crisis.”

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France & Germany demand a swift decision from Greece on the Euro

November 3, 2011

“Germany and France pressed Greece on Wednesday to make up its mind fast whether it wants to stay in the euro zone after a shock decision to call a referendum on an EU/IMF bailout stirred panic on global markets.

French President Nicolas Sarkozy and Germany’s Angela Merkel summoned George Papandreou for emergency talks in Cannes on the eve of a G20 summit of major world economies, to push for rapid implementation of measures to tackle the currency area’s debt crisis that Athens has thrown into doubt.

The Franco-German duo met first with the heads of European Union institutions and the International Monetary Fund to discuss how to limit the damage from the Greek move and apply pressure for a swift outcome. EU and IMF board sources said Greece would not receive an urgently needed 8 billion euro aid instalment, due this month, until after the vote because official creditors wanted to be sure Athens would stick to its austerity programme.”

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Obama at the G20 Summit: Eurozone crisis is a top global priority

November 3, 2011

“Resolving the European financial crisis is the most important task for world leaders, the US President Barack Obama has said at the G20 summit in Cannes. Mr Obama said the EU had taken steps towards a solution, but more details were needed about how the plan will be “fully and decisively implemented”.

As the G20 leaders begin talks, the Greek Prime Minister George Papandreou is due to meet the country’s president after holding emergency talks with his cabinet in Athens. He is facing a rebellion from ministers over plans to hold a referendum on the bailout – after France and Germany warned Greece it wouldn’t get more rescue funds until after the vote.”

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Halligan: New Eurozone bail-out destined to fail within weeks

November 1, 2011

“Last week’s eurozone “agreement”, for all the related fanfare, was a case in point. Far from making the situation clearer, allowing investors to make considered assessments, this latest announcement made Western Europe’s grotesque debt crisis even more acute, sowing further infectious spores of confusion.

The deal itself, unveiled dramatically in the early hours of Thursday, was met with the now obligatory “relief rally”. The FTSE All-World equity index soared 4.1pc, helped by signs of renewed US economic growth. European bank shares spiked no less than 12pc on Thursday, as traders recognised, for all the official obfuscation, the latest dollop of government largesse.”

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French court orders probe into IMF Chief Lagarde’s role in $400 million arbitration deal favoring tycoon

August 5, 2011

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IMF set to appoint France’s Lagarde as next Chief

June 27, 2011

Source

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Greece Agrees on Austerity Plan with European Union, IMF

June 24, 2011

[expand title=Read More] Source “Greece won the consent of a team of EU-IMF inspectors for its new five-year austerity plan after committing to an additional round of tax rises and spending cuts… Finance Minister Evangelos Venizelos announced on Thursday Greece’s Socialist government would lower the minimum threshold for income tax to 8,000 euros a year, increase [...]

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Financial Times: The Global Order Fractures as American Power Declines

June 15, 2011

[expand title=Read More] Source “Harold Macmillan, the prime minister who watched US power rise as the British empire crumbled, used to say that Britain would play ancient Greece to America’s Rome. These days it looks as if Rome is declining too. The US finds it increasingly hard to drive forward its vision of international trade and [...]

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Data theft from IMF linked to State Governments

June 14, 2011

[expand title=Read More] Source “The data theft from International Monetary Fund computers by hackers said to be linked to a foreign government follows incidents against companies and governments that illustrate the growth of cyber-attacks as an espionage tool. The IMF hack resulted in the loss of a “large quantity” of data, including documents and e-mails, according [...]

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Israeli central banker Stanley Fischer makes late IMF bid

June 14, 2011

[expand title=Read More] Source Israeli central banker Stanley Fischer announced a formal bid to head the International Monetary Fund, positioning himself as a dark-horse candidate as the race enters its final stages. “In normal times, you can probably rely on intuition,” Mr. Fischer said in an interview. “But all the time, in different countries, there are [...]

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