Hectic crisis diplomacy in the matter of the euro

Hectic crisis diplomacy in the matter of the euro

The federal government on monday resisted speculation about new aid in the short term. Federal finance minister wolfgang schauble met with his U.S. Counterpart timothy geithner while on vacation on the island of sylt. Time is running out for athens, a new austerity program must be in place soon. Spain slides further into recession.

Hopes of new interventions gave the stock market a tailwind: the dax continued its gains of the past three trading days with an increase of almost 1.3 percent to 6774.06 points.

Juncker had told the "suddeutsche zeitung" (monday): "what measures we will take, we will decide in the next few days. We have no more time to lose."What exactly will be done and when is still open: "it depends on the developments in the next few days and on how quickly we have to react."Juncker's entourage said on monday that there were currently no plans for a telephone conference of the finance ministers of the 17 euro countries. A spokeswoman for the finance ministry in berlin pointed out that the next regular eurogroup meeting is scheduled for september.

Schauble and geithner insisted on the implementation of the agreed mabreakdowns to stabilize the eurozone. During the one-hour meeting on the north sea island, both ministers stressed, according to a statement from the finance ministry, that politicians must "agree on and implement all the reform measures needed to overcome the financial and confidence crisis". Geithner and schauble had taken note of the most recent excursions of "eu decision-makers" to do everything possible to preserve financial stability in the eurozone.

Both politicians praised the progress made by almost all euro crisis countries. They referred to ireland, which succeeded last week in placing long-term bonds. Portugal certified "continued success" in meeting promised savings efforts. They also spoke of "considerable efforts in spain and italy". The USA has long been urging the euro countries to take further steps against the debt crisis.

Despite recent statements that it would do everything to protect the eurozone, the federal government continues to reject joint government bonds issued by eurozone countries.

Earlier, comments by ECB chief mario draghi had led to speculation about renewed intervention by the central bank. The european central bank (ECB) will do everything possible to ensure the preservation of the euro, draghi had said. On the markets, this was seen as an indication that the ECB could resume its program of buying government bonds from weak eurozone countries.

According to juncker, the 17 euro countries, together with the EFSF bailout fund and the ECB, are preparing to buy up government bonds issued by eurozone sovereigns: "we are coordinating closely with the central bank and, as draghi says, we will see results. I do not want to raise expectations. But I have to say we have reached a crucial point," said juncker.

However, such an intervention by the EFSF was apparently not yet imminent on monday. A spokesman for the EU commission said in brussel that spain had not yet requested such intervention in the bond markets.

ECB sources said draghi and bundesbank president jens weidmann planned to meet ahead of the ECB's governing council meeting scheduled for thursday. An ECB spokeswoman said in frankfurt: "it is quite normal practice and nothing special for mr. Draghi to meet with members of the ECB's governing council."Weidmann had repeatedly spoken critically of the purchase of government bonds by the central bank. Only on friday, a bundesbank spokesman had confirmed: "government bond purchases by the ECB are not the best way to deal with the sovereign debt crisis."

Juncker blames germany in part for worsening crisis. Germany allows itself the "luxury of constantly making domestic policy on euro issues". Senior politicians argued for greece's exclusion from the euro without waiting for the experts' preliminary report. The federal government did not want to comment on the examinations. Government spokesman georg streiter stressed, however, that european policy is of course always domestic policy as well.

For greece, meanwhile, the air is getting darker: in the next two years alone, 11.5 billion euros will have to be saved. Negotiations on this issue continued to be difficult and were adjourned on monday evening without a result. "The consultations will continue in the next few days," the head of the small government party democratic left, fotis kouvelis, said on television after a meeting with the heads of the other two government parties, the conservatives and the socialists.

Spain slides deeper into recession due to drastic government austerity measures and mass unemployment. Gross domestic product (GDP) contracted by 0.4 percent in the second quarter compared with the previous quarter, according to the spanish statistical office. With this, the statisticians confirmed a first estimation of the spanish notebank. Spain's GDP had already contracted by 0.3 percent in each of the two previous quarters.

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