Europe's latest tonic could worsen Osborne's political problems
Peter Hoskin 9:57am
Seems that the latest plan to fix the eurozone involves cooking up a pot of alphabet
soup. Over in Mexico, G20 finance ministers are currently discussing whether to blend two existing eurozone bailout funds, the EFSF and the ESM, with some extra money from the IMF. They hope that
this EFSF-ESM-IMF mix will add up to about £1.25 trillion of ready cash for failing eurozone economies. ‘Look at the size of our fund,’ they will then say, as they try to settle
nerves across Europe and beyond.
Details are lacking, but some things are already worth noting about this potential mega fund. First is that it seems to be coming about with permission from Germany. They had previously been opposed to organising another whip round, as this could make countries complacent about sorting out their own problems. But now, according to Reuters, that opposition appears to be ‘easing’. There is still a lot of politics to be unwound in Berlin, but, in theory, we could hear an announcement in the next month or so.
And then there's the involvement of the IMF. The idea is that they will contribute around £300-500 billion once the EFSF and ESM have been merged. This would avoid the sort of situation that we saw last October when eurozone leaders boasted about creating a €1 trillion fund, only to promptly discover that China wasn't too interested in buying up their debt. The money would be there this time.
It could, of course, also include the UK. George Osborne is insistent this morning that we would only involve ourselves in this fund, via further IMF contributions, once eurozone countries have ‘maximised’ their own involvement. But he'll also know how tricky this could be for him in the months ahead. America has ruled out further contributions to the IMF completely; we haven't. If British money does end up in this new fund, then Osborne's hazy distinction between supporting ‘countries not currencies’ will have been blurred even further — and to the disgruntlement of many Tory backbenchers, among others.
Previous
ellis000
February 26th, 2012 10:15am Report this commentSaw Osborne on Sky this morning and he seemed to rule out UK and IMF money. The Telegraph agrees: http://www.telegraph.co.uk/finance/financialcrisis/9106601/Debt-crisis-Chancellor-George-Osborne-rules-out-new-Eurozone-bail-out.html
So what is this all about then?
john
February 26th, 2012 10:54am Report this commentMPs have already signed off an amount for the IMF with 10bil. remaining. Our contribution of 3.5% IMF means a total of 285 bil. with no further domestic democratic input, which is well on the way to the total suggested, so don't expect any further vote by MPs
Jeremy
February 26th, 2012 10:56am Report this commentWhat strikes me most forcibly about all of this is how important the political and economic 'Oompf' of Germany has become to the entire European 'enterprise' (for want of a better term). Bismarck must be grinning from ear to ear in the Great Hereafter.
Anyone for a 'Grossdeutschland'?
Russell
February 26th, 2012 11:22am Report this commentIf Osborne commits the UK in giving money (which the UK doesn't have and would have to borrow) via the IMF to help the euro, the tories will never get my vote again, and I suspect many millions of the electorate, mainly conservatives.
Forget the NHS reforms and the Welfare reforms (which I personally think should be done), this would ensure the tories lose the next election, in fact, they would get slaughtered.
Pete Hoskin
February 26th, 2012 11:48am Report this commentellis000: Osborne didn't rule out our involvement in this fund completely — he just put a condition on it (i.e. a greater commitment from eurozone countries). My point is that this could get problematic for him should the fund actually arrive. He's always spoken of us increasing our IMF contributions to support "countries not currencies". If those contributions were wrapped up in a eurozone fund, as they might be, then that distinction would be next to meaningless — and politcally controversial.
I've tried to make that clearer in my post above.
Frank P
February 26th, 2012 12:29pm Report this commentAhhhhh! Smell the acronymical world of undemocratic internationalist power that pervades the globe. Puppets and muppets dancing in the limelight to the will of the string-pullers behind the curtains. The politics of posture.
Wilhelm 1
February 26th, 2012 1:07pm Report this commentI think I'm a prophet because in 6 months time Greece will want another £150 Billion and 6 months after that another.
Greece is not the problem, it's the Euro, fitting square pegs into round holes does not work but the lame steam media painted the Eurosceptics ( correct name Eurorealists ) as swivel eyed nuts.
TomTom
February 26th, 2012 1:43pm Report this comment75% German Public oppose this money for Greece. Time to have NEw political parties or to overthrow the Berlin Regime
David L
February 26th, 2012 2:49pm Report this commentThrowing good money after bad. Europe needs to live within its means - ie trim its bloated state spending and reduce taxation and reguation to allow wealth creation. And that includes us.
Chris
February 26th, 2012 3:43pm Report this commentAccording to statement by Schaeuble quoted in Athens News it seems a distinct possibility that the extra funds to boost the ESFS/ESM from Germany will be made available (and then Osbourne would be able to go ahead and give more of our money to the eurozone via the IMF?).
http://www.athensnews.gr/portal/10/53586
michael
February 26th, 2012 4:05pm Report this commentThis is going to be the longest game of kick the can on record. Ultimately, Germany is prepared to supervise any form of politico-fiscal stitch-up to maintain its Euro edge and hence, competitive advantage, within the faux free market ... Thus keeping the long term softly softly 'Uber alles' strategy bubbling nicely.
It is the last decade of insider horse trading within GERMANY'S own rigged EEC that has redistributed EU wealth towards Berlin, that Germany now needs to use to pay for its un-common market's continuance.
Verity
February 26th, 2012 5:28pm Report this commentWho is that imperial, self-regarding woman in the photo? Has she been elected to anything? She has the self-serving, self-congratulatory air of an appointee.
MajorFrustration
February 26th, 2012 5:39pm Report this commentSo our MPs have signed off on a further 10Bn - so why have the USA still not sanctioned their 2009 contribution to the IMF. Have we been suckered yet again?
Herbert Thornton
February 26th, 2012 10:05pm Report this commentI hope this isn't an unsuitably flippant comment, but when I read -
"........some things are already worth noting about this potential mega fund...... it seems to be coming about with permission from Germany. They had previously been opposed to organising another whip round.... But now, according to Reuters, that opposition appears to be ‘easing’." -
I immediately thought - should that be "quantitively easing"?
Robert davidson
February 26th, 2012 10:40pm Report this commentGermany takes the line that they have to keep the purse strings tight to force structural change in southern Europe. The rest of the world should say the same to the Eurozone in general and Germany in particular. No cash until you sort out your structural weaknesses. End the madness that is the current Euro.
TomTom
February 27th, 2012 9:22am Report this commentMichael you are a comic. Germany does not exist, watch Schauble on YouTube 18 Nov say Germany has not been sovereign since May 1945.
It is THE BANKS that get the money supposedly sent to Greece to prop up their balance sheets. The problem is the Impairment of Assets under IFRS and IAS39 which makes Banks INSOLVENT so they are subsidising them via Greece
EC
February 27th, 2012 9:39am Report this comment"Puppets and muppets dancing in the limelight to the will of the string-pullers behind the curtains. The politics of posture."
Christine Laggard looks quite starchy, Osborne limp. One wonders what posture DSK is being forced to adopt now
http://www.nationalreview.com/corner/291533/sophisticated-touch-dominique-strauss-kahn-mark-steyn
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