An EU official has been quoted anonymously by Reuters as saying that last year the euro crisis abated once European policymakers retired to their sun loungers and thereby stopped contradicting each other. After another day of seemingly contradictory statements on precisely what last week’s “comprehensive solution” really amounted to, the EU official noted, “that moment can’t come soon enough this year”.
Regrettably for him, it’s already looking like they’ll be denied their relaxation. The cost of insuring Italian and Spanishg government debt against default rose sharply again today after Wolfgang Schaeuble, the German finance minister, sought to address domestic political concerns in Germany by saying that the deal didn’t give the European rescue fund “carte blanche” to buy bonds in the secondary market, but would only take place in “exceptional circumstances”.
Spreads on Spanish and Italian bonds are now back to where they were before last week’s emergency summit. This was partly attributed to worries about the American debt crisis, though quite why this should affect Spanish and Italian bond prices but not unduly concern US ones is indeed a mystery to behold.
In any case, it looks like being a long hot summer, and not one spent on the beach either.
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