Market reaction seems to indicate that people believe the eurozone big 4 are getting their act together on an EU TARP-like formal plan for bank bailouts, as recommend by the U.S. administration all along. TARP worked in the U.S. and hopefully it will work in the EU too, so they hope.
Merkel and Schaueble seem to be listening to the cry for solidarity, and they are being softened up by relentless media and other attacks. Yesterday, the media reported that Merkel agreed to allowing the use of current bailout funds ESM, EFSF for bank loans or "capitalization" - is it debt or preferred equity? - and got their wish to have the ECB overseeing the bank and sovereign bailouts.
While that's very short of debt mutualization, which Germans won't agree to, it is a solid move in the direction of a TARP-like formal plan. Direct capitalization of banks should take the pressure of Italy and Spain's sovereign-debt funding spreads, which is what Monti cried out for. If this works, Monti will surely cooperate on EC9/10 FTT.
Unfortunately, this news of an agreed-upon TARP-like plan does not bode well for those who do not want to see EC9/10 FTT move forward - and that's us.
The big 4 all support EC9/10 FTT and it is shaping up to be an integral part of the TARP-like plan - the required fiscal union piece. The big 3 (France, Italy and Spain) seem to be leaning pretty good now on Germany, and Merkel has German socialists nipping at her heels, too. Media reports they agreed yesterday that EU bazooka funds may now be used to capitalize banks, so the EU will want tax revenue to pay the bill and for their operations. If not directly to an EU center - which isn't worked out yet - or to the individual countries passing FTT. That's a big problem to still be worked out.
If they pay EC9/10 FTT to an EU center, it benefits the UK, too, plus the UK wins extra business by not having FTT on banks - who are exempt from UK stamp duty. That's why the big 4 are so upset with the UK.
We can expect more infighting over EC9/10 proposals, if the FTT explodes in London, and who gets to keep the FTT revenues. Individual countries, or the EU and which body in the EU. There is no EC9/10 government per see. I am guessing, France will keep it's FTT revenues and others will follow for the time being, rather than slow down EC9/10 FTT proposals or enactment.
In general, the FTT proponents want banks to pay FTT, to pay back government for the bailouts.
My main point is that if an EU or eurozone banking union continues to advance with this TARP-like breakthrough on formality and execution, the big 4 will want a fiscal union tax plan formalized, too.
Merkel and Schaueble seem to be listening to the cry for solidarity, and they are being softened up by relentless media and other attacks. Yesterday, the media reported that Merkel agreed to allowing the use of current bailout funds ESM, EFSF for bank loans or "capitalization" - is it debt or preferred equity? - and got their wish to have the ECB overseeing the bank and sovereign bailouts.
While that's very short of debt mutualization, which Germans won't agree to, it is a solid move in the direction of a TARP-like formal plan. Direct capitalization of banks should take the pressure of Italy and Spain's sovereign-debt funding spreads, which is what Monti cried out for. If this works, Monti will surely cooperate on EC9/10 FTT.
Unfortunately, this news of an agreed-upon TARP-like plan does not bode well for those who do not want to see EC9/10 FTT move forward - and that's us.
The big 4 all support EC9/10 FTT and it is shaping up to be an integral part of the TARP-like plan - the required fiscal union piece. The big 3 (France, Italy and Spain) seem to be leaning pretty good now on Germany, and Merkel has German socialists nipping at her heels, too. Media reports they agreed yesterday that EU bazooka funds may now be used to capitalize banks, so the EU will want tax revenue to pay the bill and for their operations. If not directly to an EU center - which isn't worked out yet - or to the individual countries passing FTT. That's a big problem to still be worked out.
If they pay EC9/10 FTT to an EU center, it benefits the UK, too, plus the UK wins extra business by not having FTT on banks - who are exempt from UK stamp duty. That's why the big 4 are so upset with the UK.
We can expect more infighting over EC9/10 proposals, if the FTT explodes in London, and who gets to keep the FTT revenues. Individual countries, or the EU and which body in the EU. There is no EC9/10 government per see. I am guessing, France will keep it's FTT revenues and others will follow for the time being, rather than slow down EC9/10 FTT proposals or enactment.
In general, the FTT proponents want banks to pay FTT, to pay back government for the bailouts.
My main point is that if an EU or eurozone banking union continues to advance with this TARP-like breakthrough on formality and execution, the big 4 will want a fiscal union tax plan formalized, too.