As H&H posted this morning, there appears to have been some confusion over just what happened in the European camp at the G20, stemming from some overzealous reporting by a couple of UK papers.
The problem is that, as far as I can tell, none of it is true. From Reuters:
There was no discussion at a G20 summit in Mexico this week about using Europe’s rescue funds to buy up the bonds of stricken members of the euro zone, a German government official said.
British media reports on Tuesday said German Chancellor Angela Merkel was poised to use Europe’s dual bailout funds, known as the EFSF and ESM, to buy up the debt of countries like Italy and Spain and had discussed the plans at the summit.
“Secondary market bond purchases are one of many instruments available to the EFSF and ESM,” a German government official told Reuters, speaking on condition of anonymity.
But he added: “There was no discussion here in Los Cabos about any concrete intitiatives” related to such purchases.
But that is not the only denial to come out of the G20, the German camp appears to also be fabricating stories if its own:
“All agreed that once audit results are available, then Spain should make its application as soon as possible,” Merkel told reporters today in Los Cabos. “Spain will make its request soon.”
“We also talked about how we need clarity on Spain’s application as soon as possible,” Merkel said. “We all know that banks that aren’t properly capitalized are a source of turmoil and risk for the economy.”
That, however, doesn’t fit with the Spanish version ( translated ) of what is happenning:
I have to deny it, I was surprised by information that says that someone has asked us to do and the formal request to the bank credit. No one has considered this and we are most interested in that is resolved as quickly as possible. ” Rajoy confirmed later that outright denial.
….
The president made it clear that everything is in the air and are negotiating mechanisms. “We have to wait for the evaluators , which will not yield the results on Thursday. We are negotiating the memorandum, we have to see what will be the instrument, the EFSF, the MEDE, a different one, “went on to say. “In any case, the important thing is that there is political will, but as I said, no one spoke at the G-20 a word of that issue.”
A little rough on the translation but the message is clear, Rajoy is openly denying Merkel’s version of events.
So, as far as I can tell, in terms of Europe not much was actually decided at the G20 at all. The communique ( available below ) just seems to be a repeat of all of the things Europe has been promising for years:
Against the background of renewed market tensions, Euro Area members of the G20 will take all necessary measures to safeguard the integrity and stability of the area, improve the functioning of financial markets and break the feedback loop between sovereigns and banks. We welcome the significant actions taken since the last summit by the Euro Area to support growth, ensure financialstability and promote fiscal responsibility as a contribution to the G20 framework for strong, sustainable and balanced growth. In this context, we welcome Spain’s plan to recapitalize its banking system and the Eurogroup’s announcement of support for Spain’s financial restructuring authority.The adoption of the Fiscal Compact and its ongoing implementation, together with growth-enhancing policies and structural reform and financial stability measures, are important steps towards greater fiscal and economic integration that lead to sustainable borrowing costs. The imminent establishment of the European Stability Mechanism is a substantial strengthening of the European firewalls. We fully support the actions of the Euro Area in moving forward with the completion of the Economic and Monetary Union. Towards that end, we support the intention to consider concrete steps towards a more integrated financial architecture, encompassing banking supervision, resolution and recapitalization, and deposit insurance. Euro Area members will foster intra Euro Area adjustment through structural reforms to strengthen competitiveness in deficit countries and to promote demandand growth in surplus countries. The European Union members of the G20 are determined to move forward expeditiously on measures to support growth including through completing the European Single Market and making better use of European financial means, such as the European Investment Bank (EIB), pilot project bonds, and structural and cohesion funds, for more targeted investment,employment, growth and competitiveness, while maintaining the firm commitment to implement fiscal consolidation to be assessed on a structural basis. We look forward to the Euro Area working in partnership with the next Greek government to ensure they remain on the path to reform and sustainability within the Euro Area
I live in hope… but I’ve heard it all before.