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Reuters reports that it has seen a draft of tomorrow's euro rescue announcement--but minutes later headlines deny major parts of that draft
12/08/2011 5:30 pm EST
A fiscal compact (and not treaty change?) that would produce tighter rules on budget deficits and new penalties for violating those rules. Government budgets would, in principle, the draft says, be balanced. Member states would be allowed to run deficits only to account for the business cycle or exceptional economic circumstances. The structural deficit would be limited to 0.5% of GDP.
A speed up of the European Stability Mechanism, the permanent bailout fund designed to replace the European Financial Stability Facility, to July 2012 (from the end of 2012 or 2013).
The European Stability Mechanism would have funding of 500 billion euros ($675 billion.)
Granting of a banking license to the European Stability Mechanism that would allow the bailout fund to borrow directly from the European Central Bank on terms similar to those now extended to European banks.
Empowering the European Stability Mechanism to directly recapitalize banks.
Continued operation of the current bailout fund, the European Financial Stability Facility, until mid-2013.
But is the draft an accurate reflection of anything?
The Reuters report crossed the wires around 3:45 New York time. By 3:48 headlines on the wires said that Germany had rejected the plan to grant the European Stability Mechanism a banking license and opposed allowing the operation of the new ESM at the same time as the older European Financial Stability Mechanism continued in business.
Tomorrow should be interesting.
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