Big bazooka!!

Liam’s worried about those soaring oil prices

‘Central bankers poised to release more money to relieve the stress of European institutions”

Latest from David Smith at economicssuk.com

I agree with his take on the March 21 budget.

MEXICO CITY (MNI) – The German economy is basically in good shape
but the sovereign debt crisis will determine the robustness of growth in
the Eurozone’s largest economy and elsewhere, European Central Bank
Governing Council member Jens Weidmann said late Saturday.

Weidmann, who heads the German Bundesbank, told journalists in a
briefing on the margins of the meeting of G-20 financial ministers and
central bank governors that the current global economic environment is
one in which a weak phase seems to be giving way to signs of
improvement.

“Inasmuch, there are chances that the relatively pessimistic
prognoses of the IMF are exceeded,” he said.

In Germany, “prospects have brightened recently,” he said, noting
positive developments such as the continued favorable trend on the labor
market as well as “normal” capacity utilization.

“The German economy is in good condition fundamentally,” he said.
“However, business-cycle prospects not just in Germany hinge also on the
development of the debt crisis.”

Weidmann reiterated the assertion of his speech at Friday’s IIF
conference here, saying that in contrast to the views of some, “Germany
already makes a substantial contribution” to stability, a fact he
complained is “sometimes swept under the carpet.”

Germany does this, he argued, not merely by shouldering its proper
share of the financial burden of common measures, “but also in its role
as an anchor of stability” and by championing rules for a viable
currency union.

He again took to task those who would urge that “Germany should use
its fiscal room to maneuver to support the business cycle” elsewhere in
Europe.

Such demands overlook the fact that “the positive effects on the
periphery of the Eurozone are relatively slight,” especially compared to
the cost of “shattering confidence in the German consolidation course.”

–Frankfurt bureau tel.: +49-69-720142. Email: dbarwick@marketnews.com

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MEXICO CITY (MNI) – German Finance Minister Wolfgang Schaeuble on
Saturday downplayed expectations for any decision on a larger Eurozone
bailout fund at the upcoming EU leaders summit and refrained from
signaling German support for boosting the fund.

“The heads of state and governments in December decided that they
will review whether the sum [available to the rescue fund] is sufficient
in March,” Schaeuble said during a press briefing during the meeting of
G-20 finance ministers and central bankers.

He stressed that March had 31 days, thus signaling that no decision
should be expected for the upcoming European leaders summit on March
1-2.

Pressed on Germany’s position on combining the temporary rescue
fund with its permanent successor to boost it to E750 billion, ,
Schaeuble merely reiterated that “the question will be decided in
March.”

The comments come following media reports that Germany is now ready
to support a larger European firewall.

The outcome of this review in March “will also depend on the speed
with which the capital will be paid into the ESM,” Schaeuble said. He
said that there has been some tendency “to say, ‘let’s not do it in five
tranches but in two tranches.’”

An early capitalization of the ESM could make boosting the total
sum less pressing. In earlier comments in Mexico, Schaeuble did not
sound as though Germany would be quick to boost the fund.

“Should we make collectivise sovereign debt in the Eurozone? Should
the European Central Bank print money to finance the member states’
budgets? Should we make the firewalls ever bigger? The answer is an
emphatic no,” Schaeuble said in a newspaper contribution.

Schaeuble also said Saturday that during the G-20 meetings he had
had “intensive discussion” about the state of the Eurozone debt crisis.
“I believe you can conclude that all participants view very positively
what we have come up with in Europe. There is no deviating assessment
that we are not on the right path with our stabilization measures.”

“We have also received great support for the second Greek
package…I expect that on Monday we will gain the necessary support in
the Bundestag,” Schaeuble said.

–Frankfurt newsroom +49 69 72 01 42; e-mail: jtreeck@marketnews.com

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“I’m not saying that Greece should be thrown out but rather to create incentives that it can’t say ‘no’ to”

MEXICO CITY (MNI) – Short-term stimulus measures will not allow
Europe to solve its debt crisis, German Finance Minister Wolfgang
Schaeuble said Saturday at a lunch speech on the sidelines of the
meeting of the Group of 20 finance ministers and central bankers.

Schaeuble stressed that Europe will not be able to spend its way
out of the crisis but will have to continue a slow, sometimes painful
path of fiscal adjustment and economic reforms.

He conceded that austerity alone will not be sufficient to reduce
debt.

“Growth is a necessary ingredient. But growth has to be sustainable
and therefore Europe has opted for boosting productivity, increasing the
exposure of its markets to foreign competition, improving education its
systems and making its labor markets more flexible and more integrate,”
he said.

Rather then spending ever more money, the Eurozone must focus on
implementing swift fiscal and structural reforms “because only these
policies will work,” Schaeuble said. “We are not merely addressing the
symptoms but the causes of the problems — so far with success.”

Indeed, in his speech Schaeuble underlined that the Europe’s has
“done its homework” and that its approach to addressing the crisis has
already proven to be the right one. “The tightening of bond spreads on
recent weeks shows we are on the right path,” he said.

in an opinion piece that closely mirrored the speech and was
published in Mexican daily El Universal Friday Schaeuble said, “Should
we make mutualise sovereign debt in the Eurozone? Should the European
Central Bank print money to finance the member states’ budgets? Should
we make the firewalls ever bigger? The answer is an emphatic no.”

“On the contrary, the crisis is an indictment of such thinking. A
growth strategy (based) on piling up more debt will stunt rather than
stimulate growth in the long run,” Schaeuble said in his opinion piece.

In his speech, Schaeuble also said the second Greek bailout
packages agreed last Monday “should put Greece on the right path.”

–Frankfurt newsroom +49 69 72 01 42; e-mail: jtreeck@marketnews.com

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–Europe Needs More Steps on Stronger, More Credible Firewall
–US Has Unfinished Business, Worried About Cost of Political Inertia

By Heather Scott

MEXICO CITY (MNI) – U.S. Treasury Secretary Tim Geithner Saturday
said actions by European policymakers have gone a long way to reducing
downside risks to the global economy, but they must do more to be
credible in their commitment to avoiding a “catastrophic financial
failure.”

Geithner, speaking just before the start of the meeting of Group of
20 finance ministers and central bankers, also acknowledged the
“unfinished business” in repairing the U.S. economy and warned about the
“costs of political inertia” on the long-term fiscal challenges.

In a conversation with former Mexico central bank governor
Guillermo Ortiz, Geithner said, “Europe is making quite a bit of
progress in convincing the world that they are not going to allow a
catastrophic financial failure in the continent.”

But he added that “they are not done in that effort and they know
they have more work to do in making that commitment credible.”

He was referring to the topic likely to consume much of the time
during the G20 meetings: urging European officials to move more quickly
to complete an emergency financing backstop for the euro area.

“I hope that we’re going to see, and I expect we will see,
continued efforts by the Europeans to not just deliver on the reform
commitments that they’ve made to economic policy, but to the
institutions of Europe, and to put in place a stronger, more credible
firewall,” Geithner said.

“If they do that,” he said “there will be more oxygen to focus on
the long-term questions.”

And while he praised European officials for decisive actions that
have had “a big impact in reducing downside risks globally, and reducing
the financial pressures that were so intense in the last quarter of
2011,” he urged more action.

“It’s important though not to rest on that progress, and to
recognize that progress is there in part based on expectation that
there are more things to come, more actions to come in making the
commitment to a firewall more credible,” Geithner said.

Earlier Saturday, Federal Reserve Vice Chair Janet Yellen told
Market News International there was unlikely to be progress on the issue
at the weekend meeting because “there are a lot of political constraints
in Europe that make it difficult” to get rapid action on the firewall.

In an apparent hint to the more recalcitrant sectors in Europe,
Geithner said the lesson of the crisis is that it is “better to be
forceful, and do more than is necessary.”

He also noted that the challenges in Europe are not entirely
fiscal, and more growth is needed.

“I think it’s very important that the large economies in Europe
that are in such relatively strong financial and economic shape, are a
source of growth for the continent, so that they can help offset the
deeply tough and difficult pressures that those large parts of Europe
most caught up in the crisis are going to be going through for a long
period of time,” he said.

Geithner also acknowledged the lingering problems in the U.S.
economy, which, although it is showing signs of improvement, still has
unfinished business.

“The U.S. is gradually getting stronger. It looks more resilient
than many people feared. Most measures you look to for underlying
economic health are really looking better,” he said.

However, the “big challenges ahead are some unfinished business on
financial repair, particularly on the housing market, the housing
finance system; (and) obviously our long-term fiscal problems.”

While he pledged a “downpayment” on long-term fiscal reform this
year, Geithner also cautioned that “Economic policy is all politics and
our country is quite divided now on the ultimate shape of long-term tax
reform and reform to our healthcare system. And those are challenges we
can’t put off indefinitely.”

He said the size of the fiscal problem is “pretty modest” relative
to the size of the American economy, especially given the automatic
spending cuts locked in through last year’s budget agreement.

So although “we all worry about the costs of political inertia,”
Geithner said, “I am really very confident, because of the incentives
created by this huge fiscal clip at the end of this year, that you’re
going to see the American political system make another downpayment on
long-term fiscal reform towards the end of this year.”

** Market News International Washington Bureau: 202-371-2121 **

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–Don’t Expect Any Breakthroughs at G20 Meeting

By Heather Scott

MEXICO CITY (MNI) – Federal Reserve Vice Chair Janet Yellen
Saturday said she sees political impediments to quickly completing an
emergency financing backstop for the euro area.

Yellen, who was attending the meetings of the Group of 20 deputies,
ahead of the weekend meeting of finance ministers and central bankers,
told Market News International she does not expect any resolution of the
issue at this meeting.

Asked if European leaders appeared poised to finalize plans for the
crisis financing fund, Yellen told MNI, “I don’t know that they will. I
think there are a lot of political constraints in Europe that make it
difficult.”

The completion of the European Financial Stability Facility is
expected to be a key topic of the weekend meetings, with officials from
the United States, Canada, Mexico and others pushing EU officials to
rapidly finalize efforts to provide sufficient funding, that can be
rapidly deployed, to convince markets they can credibly deal with any
spillover if another crisis erupts.

Yellen said there had been a “lot of discussion of the additional
resources for the IMF and the firewall in Europe,” but she cautioned,
“Don’t expect any breaking news.”

U.S. Treasury officials have said repeatedly they will not support
additional resources for the IMF this year, and certainly not until the
European firewall is resolved.

** Market News International Washington Bureau: 202-371-2121 **

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‘The latest Greek bailout totaling 130 billion merely buys time, outgoing World President Robert Zoellick said in an interview in Singapore with Reuters’

‘Eurozone leaders may not be able to meet international demands to ramp up their own funds for bailing out the bloc’s debtors when they meet next week’

‘The man behind the U.K. government’s aggressive cost-cutting plans, Treasury chief George Osborne, is facing increasing pressure’

Love him or loathe him, latest from AEP at The Telegraph.