Nein! Nein! Nein! Again
By Ambrose Evans-Pritchard
June 5th, 2012
No, Germany has not agreed to a “banking union”.
It has not agreed to mutualise the costs of bank bail-outs, knowing perfectly well that this means ‘Eurobonds lite’ and the start of a slippery slope towards debt pooling.
It has not cleared the way for use of the EU rescue machinery (EFSF and ESM) for direct recapitalisation of banks – which is what Spain wants to avoid having to bear the contingent liabilities of its crumbling lenders on sovereign shoulders.
Germany has not moved one inch towards fiscal union of any kind. It may do so (I make no prediction). It has not done so yet. Europe faces exactly the same problem it has had since the start of the crisis.
There is no breakthrough on the Spanish banking crisis. Quite why the Madrid and Milan bourses have been rallying is beyond me.
Germany has agreed to explore extra supervisory powers for a European banking authority, in the “medium-term” once umpteen other conditions have been fulfilled.