From the FT:
Why is this a market moving event?Our friends and rivals over at The Daily Telegraph have gotten their hands on an interesting document from the German government detailing its proposals for EU treaty change, and have helpfully posted it online (with an English translation by the Open Europe think thank).
Although the Telegraph focuses on its implications for Britain, there is a significant amount of detail on how Berlin would like to change eurozone economic governance, including yet another stab at enshrining bondholder “haircuts” in the EU treaties.
For those who haven’t followed the debate closely, there is now a closed-door fight going on about whether Greece really will be the only country that sees its bondholders pushed into losses – as the eurozone’s leaders have repeatedly insisted in their summit conclusions – or whether the bloc’s new €500bn rescue fund, which could come into place as early as next year, should allow for organised defaults.
When broader default powers were mooted for the ESM at this time last year in a much-discussed agreement between France’s Nicolas Sarkozy and Germany’s Angela Merkel in the French seaside town of Deauville, bond markets swooned, sending Ireland and then Portugal into bail-outs. Days later, during a G20 meeting in Seoul, Merkel was forced to back down. But the issue clearly hasn’t died.
In other words, while everyone believes Germany has been boxed into a corner and has no choice but to relent on global demands to let the ECB do whatever France demands, Germany was making other plans all along. Such as having the opion to kick France out of the Eurozone if and when it so chooses.Because after all, money talks. And in Europe, only Germany has the money.
There is more! Reuters is reporting the leak of confidential Irish budget information by German lawmakers and Irish parliamentarians are seething - viewing the leak as 'incredible' and 'unprecedented'. Given the new laws, Germany now has the right to be fully informed about bailout countries' progress before new tranches of funds are paid out. As the Irish Daily Mirror put it perfectly "Germany is our new master."
Reuters: Ireland cries foul after German budget leak
The Irish government has complained to European partners after confidential budget information shared with its EU-IMF lenders was leaked by German lawmakers, sparking a political storm at home.
The media and opposition reacted furiously at the fact that the details of the December budget were presented to German lawmakers before their Irish counterparts, heightening fears that its EU-IMF bailout has undermined Irish sovereignty.
"Germany is our new master," ran a banner front-page headline in the Irish Daily Mirror. Opposition leaders in parliament described the leaks as "incredible" and "unprecedented" and demanded the government explain.
New German laws give its parliament the right to be fully informed about bailout countries' progress before new trenches of funds are paid out and Ireland's main opposition party led cries Germany was now calling the shots in Europe.
Germany is pushing aggressively for EU treaty change to create tighter fiscal discipline across the bloc and a spokesman for its finance ministry said there was a clear procedure allowing parliament to see confidential documents belonging to countries in EU/IMF programmes.
The leader of Ireland's largest opposition party said voters were entitled to an explanation of why the information was given to European partners before Irish lawmakers.
"I think it will be damaging in the sense that it plays to a narrative that Germany is calling shots all over Europe," Fianna Fail leader Michael Martin told Reuters.
"It will damage sentiment towards Europe and that is a problem."