Let's All Get Up And Dance To A Tune

The EU's Gonna Play All The Hits

Via TPM today:

Angela Merkel is poised to allow the eurozone’s €750bn bailout fund to buy up the bonds of crisis-hit governments in a desperate effort to drive down borrowing costs for Spain and Italy and prevent the single currency from imploding.

Germany has long opposed allowing the eurozone’s rescue fund... But Merkel has come under intense pressure as financial markets have pushed up borrowing costs for Spain to levels that many analysts see as unsustainable.

Analysts are likely to see the decision as the first step towards sharing the burden of troubled countries’ debts across the single currency’s 17 members, though it falls short of the “eurobonds” proposed by the European commission president José Manuel Barroso.

The proposal was discussed on the margins of the two-day G20 summit in Los Cabos, Mexico, which has been dominated by the depressing impact of the eurozone crisis on the world economy.

...The [British Chancellor Of The Exchequer], George Osborne, hinted at the possible deal saying the eurozone was inching towards solutions. He said: “I think there are signs that the eurozone are moving towards richer countries standing behind their banks and standing behind the weaker countries.

“There is no doubt that they [the eurozone] realise that individual measures taken in individual countries - like recapitalising Spanish banks and getting a Greek government that is in favour of staying in the euro - are not by themselves enough”

The G20 communique due to be issued later mentions “steps towards greater fiscal and economic integration that lead to sustainable borrowing costs”.

British officials are pleased that the lengthy passage on the eurozone makes specific forward-looking references to improving the functioning of financial markets and breaking the feedback loop between sovereigns and banks.

It also speaks of the need for a more integrated financial architecture encompassing banking supervision and recapitalisation and deposit insurance.

And soothing treats for Europe's Banksters, and a partridge in a pear tree.

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