EUROZONE: Clash Of The Titans...Redux! Trichet Vs Schaeuble.

BLOOMBERG/

“We have to insist on the participation of the private sector,” insists German FM Wolfgang Schaeuble (below).
But, the Big 3 credit-rating firms claim his proposal to extend Greek debt maturities by 7 years...would be a default.

Meanwhile, ECB President Trichet (above) said his bank will not roll over its own Greek holdings.

If the ECB resists, EU politicians would have to ask taxpayers to finance a Greek budget shortfall of up to 90 billion euros/$130 billion usd through 2014.

Trichet warns that forcing private-sector involvement amounts to a “credit event” and would be an “enormous mistake.” “Trichet is really digging his heels in now,” said one observer.

FOR ECONOMICS WONKS, SEE ALSO:  Default Jargon...Explained by WSJ's Charles Forelle.
   What the technical jargon used to describe the Greek debt crisis really means... eg. "credit event","selective default", etc.
 "... the nub of jargon is essential to understanding the impasse between the ECB and a German-led bloc that wants Greece's private creditors to bear some of the burden in the fresh rescue of the flagging country that's expected this month."
http://online.wsj.com/article/SB10001424052702304778304576375620604066778.html

EUROZONE: Merkel Relents...Supports Italy's Draghi For ECB; Finland Wins Changes To Support Portugal.

M.PRESS/  Poor version of  Thursday Re-post

     Germany's Chancellor Angela Merkel finally supported Italian central banker Mario Draghi...as the next president of the ECB...to replace after eight-years Jean-Claude Trichet, whose term ends in October.
    Germany is the last of the big 4 EU nations to endorse Draghi.
    On 26 April, French President Nicolas Sarkozy told PM Berlusconi that he would back an Italian.

AND: 
    A parliamentary committee allowed Finland's outgoing FM Jyrki Katainen (pictured) to support a Portugal bailout at 16 May meeting.
     Portugal needs 78bn euros $111bn in loans from the EU and IMF.
    Finland is the only country that requires its parliament to approve the bail-out package.
 http://www.bbc.co.uk/news/business-13394004

PORTUGAL/ EUROZONE: Reluctant But Beleagured, Lisboa Submits To EU Bail-out.

BBC/

    The EU announced that it will negotiate a bailout deal with  Portugal's current caretaker government.
     No exact bailout amount has been announced but observers believe loans could total 90bn euros/$129 bn usd, or more than half of its 2010 GDP.
     After months of denials...strongly "encouraged" by ECB President Jean-Claude Trichet...lame-duck PM Jose Socrates finally agreed to the aid.
      Portugal's banks, big purchasers of government debt, recently announced their reluctance to buy any more of its debt.
     Portugal only holds about $2 bn euros...but will have debts of $10 bn euros/ $14 bn usd maturing in June.
     Investors have been dumping the nation's debt...and demanding interest rates as high as 5.1% for 6-month bonds.
      Despite the fall of the Socrates government because of proposed austerity measures, the EU will continue to demand more austerity measures in exchange for its help.

AND: COMMENTARY: M. BURKE: On "the Tony Soprano bailout."

    For Ireland and Greece, an EU bailout is..." like a mobster's embrace." Get ready Portugal!

http://www.guardian.co.uk/commentisfree/2011/apr/07/portugal-bailout-european-commission

EUROZONE: Euro Declines Over Japan And Cracks In Bailout Fund As Finland Balks.

BLOOMBERG

  The bloom is off the bailout rose...as Eurozone finance ministers recently failed to bring its emergency aid fund up to the full 440 billion euros
($615 billion usd) from 250 billion euros.
  The market has noticed.
   And ECB head Jean-Claude Trichet (pictured) is frustrated.
   He does not want the ECB to be buyer of last resort of bonds from struggling debt-strapped EU nations.
  The EU parliament must also debate and approve any new measures.
   According to the WSJ, the weight of any fund increase will fall primarily on 5 nations, most prominently Germany and France...but also Finland.
   Finland is the only country to oppose an increase
   Finland faces a parliamentary election in mid-April. FM Jyrki Katainen said approving it would be...political suicide.
  Also, Greece may need more money and Moody's has downgraded Portugal debt by two notches meaning that its 12-month treasury bills rose to 4.331%, compared with 4.057% two weeks ago.
    Portugal may soon face a political crisis and thus a new EU bailout request.

GERMANY/ EU: Merkel Wins Euro Protection Dispute In "Limited" Lisbon Treaty Rewrite.

LINK CHANGE/ NYTIMES /
     Powerhouse Germany's large contribution to an emergency fund, surging exports and rapid recovery from the financial crisis empowered Chancellor Angela Merkel to get her way in a "limited" rewrite of the EU's Lisbon Treaty to shore up the euro.
     Under a system preferred by Merkel and France's Sarkozy, to be in place by 2013, highly indebted eurozone countries will be forced to restructure their debt in a process of "managed insolvency" and their creditors must take financial "haircuts".
      European Central Bank chief Jean-Claude Trichet and Spain's PM among others objected to her plan.

EUROZONE: German Weber Appears Less Likely To Succeed Trichet In ECB.

LINK CHANGE TO: REUTERS/
By Sakari Suoninen/
PREVIOUS WSJ LINK BLOCKED To NON-SUBSCRIBERS/
          Bundesbank President Axel Weber, 53,
(Pictured) may be blowing his sizable lead to succeed ECB president Jean-Claude Trichet in 2011 after repeated attacks on the ECB's handling of the euro-zone debt crisis.
    Weber believes the program only backstops indebted national governments, rather than encouraging them to get their finances in order.
    "Weber's odds are around 50% now," says German professor Stefan Gerlach. Before May, Gerlach says, he would have placed his chances at about 90%. (From WSJ)
   The well-recieved blog "Coulisses de l'Europe" (behind the scenes of Europe) written by Jean Quatremer, Brussels correspondent of France's Liberation newspaper, said the "highest level of the French government" was determined to block Weber.
    But in Germany, his comments are popular-- the German government is not complaining," says ING economist Carsten Brzeski. "For me he is still the number one candidate...He has the backing of the German government, and this is the most important thing."

EUROZONE: Bears Suffer Losses As Euro Bounce Hits 5.99% Since May.

BLOOMBERG/ Bo Nielsen and Catarina Saraiva/
    BLOOM: "The euro’s rally from a four-year low in June resulted in losses for followers of bears from Paul Volcker to Dennis Gartman. Since Volcker, the 82-year-old former Federal Reserve Chairman, said May 13 the euro may face “disintegration,” it’s up 5.99% against the dollar. Traders who held off purchasing the common currency on June 18, when Gartman called it “doomed,” missed a 7.3 % return. Buying on May 6, when European Central Bank President Jean-Claude Trichet said the euro was a “good store of value,” earned 5.28 %."
But some pessimists persist... like Jim Rogers who says the gains won’t last. They feel that the currency area will split under austerity measures undertaken by Greece, Spain, Portugal and other nations and growing divisions with stronger member states like Germany.

EUROZONE: Criticism Of Central Bank Chief Grows.

NYTIMES/     Profile/   Analysis/    Even as criticism of him grows, EU central bank chief Jean-Claude Trichet seems unfazed by it. Trichet has supporters. Former German foreign minister Joschka Fischer has praised him. “We Germans, we love principles,” he said. “Principles are fine, but in the moment of crisis even George W. Bush transformed himself into an American Lenin and nearly nationalized banking. When the house is on fire, you don’t think of principles, but containing the fire. That’s the situation we’re in now.”

EUROLAND: "The Euro Is Doomed" Claims An Analyst As It Sinks To 18-Month Low.

BLOOMBERG/         “The euro is doomed,” claims Andrew Wilkinson, analyst at Interactive Brokers Group. “It’s like a clown without its makeup. The strains among the partners are becoming clear and it’s becoming harder to see global growth not being threatened by this.” This observation came after the euro touched a new low, its weakest since October 2008. Reports also surfaced that French President Nicolas Sarkozy threatened to pull out of the euro unless German Chancellor Angela Merkel agreed to back the EU's bailout. The euro has lost 9 % this year. Some speculate it will hit $1.16 per USD... by year's end.  Central Bank President Jean-Claude Trichet wants..." a need for a quantum leap in the governance of the euro area. There needs to be major improvements to prevent bad behavior, to ensure effective implementation of the recommendations made by peers and ensure real and effective sanctions in the case of breaches." He said the current crisis may be worse than the Great Depression.

EUROZONE: An IMF Loan For Greece Is A Dangerous Precedent.

NYTIMES/ Analysis/    If Greece asks the IMF for help to solve its debt problems, as one minister has threatened, it would signal that Europe can't solve its own problems. “It would be damaging for the euro zone going forward because it would sow seeds of doubt about whether this is really a currency union, or just a group of countries that share a currency,” said economist Simon Tilford. No eurozone nation has borrowed from the I.M.F. since the EU's inception in 1999 and no major European nation since Britain in 1976.