On Tuesday the German Constitutional Court rejected a CSU lawmaker's petition, submitted Monday, to delay the ruling on the European rescue fund ESM. Moreover, Bloomberg reported that the German Finance Minister Wolfgang Schäuble believes Spain will not need to ask for a full EU bailout.
CSU member Peter Gauweiler suggested on Monday that the launching of the OTM program by the ECB last week established a new rescue fund which cannot be controlled by national governments and in this situation the Constitutional Court should approach the issue afresh. The Court rejected his petition however, confirming that the vote will be held on Wednesday at 10:00 GMT.
Meanwhile, Bloomberg informed that various German officials from the ruling party have been assuring that Finance Minister Wolfgang Schäuble does not consider necessary a full rescue for Spain. According to the sources, Schäuble praised Spanish President Mariano Rajoy's reforms and expressed his confidence that their implementation will permit the country to avoid asking for a complete bailout.
Rajoy says bailout conditions will be studied
Spanish Prime Minister Rajoy has affirmed, in a RTVE Spanish TV interview, that his team is "studying bailout conditions." The Spanish president has also said that the Iberian country will meet deficit 4.5% deficit/GDP targets and they will have regions meeting to study the region's deficit situation. But, "Spain will keep bailing out regions if necessary."
Spain’s Prime Minister Mariano Rajoy also said he will refuse outside conditions over a possible bailout, an illusion that will most likely meet harsh reality in coming weeks/monhts.
Despite the recent talks on Spain asking bailout this week, Mariano Rajoy has commented the government "has not decided whether to request ECB aid," but Spain "will request aid if judges it correct for Spain." Said that, Rajoy affirmed that "Spain knows if aid requested it will be granted."
New package of Greek budget cuts questioned by the Troika
EU, ECB and IMF inspectors, who on Sunday questioned the viability of some of the new austerity measures put forward by the Greek government, have resumed negotiations with Greek PM Antonis Samaras on Monday. Troika officials explained on Sunday that they need more details of the plan, before they can give it the green light.
Troika representatives returned to Athens last Friday in order to conclude their evaluation of the Greek government's propositions of further budget cuts, amounting to 11.5 billion euros. They decided however to suspend their decision until more details on the new austerity program are provided.
According to Greek officials, the Troika is pressing for the unpopular wage and pensions cuts as well as for the elimination of 150.000 jobs in the public sector before 2015. Greece's Finance Minister Yannis Stournaras admitted that negotiations on the new austerity plan are still being held, but he expressed his confidence that an agreement would be reached shortly.
Moody's: ECB's bond-purchase plan will not resolve the EU crisis
According to a report published by Moody's Investors Service on Monday, ECB's introduction of the bond-purchase plan at its September monetary policy meeting will only serve to buy time, but will not resolve the problems afflicting the Eurozone.
Moody´s analysts Alastair Wilson and Colin Ellis convince in their weekly CreditOutlook review that despite the fact that the plan might be beneficial for EU peripheral countries in distress, its possible impact should not be overestimated.
Even though the rating agency acknowledges the Central Bank's willingness to guarantee the survival of the euro, it affirms that these measures will not solve the sovereign debt crisis and that expects the markets “the markets will test the ECB's resolve.”
Hollande announces deepest cuts in three decades
In prime time, the French president, François Hollande, announced new adjustment in the budget for the next two years. As he emphasized, it is "an agenda to take back the country, employment, competitiveness and build a more humane and caring society."
The new measures will be aiming at reducing the budget deficit by 33 billion euros in 2013 alone, distributed in equal periods among wealthy households, businesses and all ministries except Education, Justice and Security.
Hollande called on "the rich" to "prove their patriotism", confirmed to adopt the symbolic 75% rate for incomes above one million euros limited to two years. The president reminded his countrymen the situation is "particularly sensitive."
The president said he was "in a combat situation," pledged the country to mobilize while communicating some unexpected news, such as the reduction of GDP forecast for 2013: from 1.2% to 0.8%.
