I would like to congratulate Slovakia’s classical liberal party the Freedom and Solidarity (SaS) party led by Richard Sulik for standing firm against the Euro bailout which not only led to the rejection, but also to the fall of Slovakia’s government too.
I earlier pointed out that Mr. Sulik’s party could become the last impediment to the EFSF
From Bloomberg, (bold emphasis added)
Slovakia’s opposition leader said lawmakers must find a way to approve Europe’s enhanced bailout fund, which was rejected yesterday amid a dispute over the future of Prime Minister Iveta Radicova.
Slovakia “must sign up to the rescue fund,” Robert Fico said late yesterday, adding that his party, which didn’t back the measure yesterday, is awaiting a proposal from the ruling coalition. Radicova said the only country in the 17 nations that use the euro that has yet to approve European Financial Stability Facility, must find a solution to approve the EFSF “as soon as possible.” No time for a new vote has been set…
A total of 55 lawmakers of the 124 present backed the motion, short of the required majority of 76 deputies. Nine were against it. The vote was destined to fail after the Freedom and Solidarity party, one of four coalition members, said it wouldn’t support the changes.
With average salaries still below those in Greece, it’s getting tougher to garner support among the poorest euro citizens for further aid to their Mediterranean partners.
As the crisis continues to engulf the euro region and threatens its lenders, German and French leaders at a meeting on Oct. 9 pledged to devise a plan to recapitalize banks, help Greece and strengthen Europe’s economic governance. German chancellor Angela Merkel, after meeting French President Nicholas Sarkozy, said Europe will do “everything necessary” to ensure that banks have enough capital.
The expanded powers of the 440 billion-euro ($600 billion) EFSF would allow the fund to buy the debt of stressed euro-area nations, aid troubled banks in the region and offer credit lines to governments. The EFSF’s current role is to sell bonds to finance rescue loans.
The Slovakia’s vote on the EFSF is still expected to be passed as the ruling party intends to tie up with other opposition bloc.
Aside, ECB officials are reportedly weighing on options to circumvent Slovakia in case she remains intransigent. In short, rules be damned, just save the bankers.
Obviously the hefty rebound by global equity markets have been based on the recently announced QEs by the ECB and the BoE, which has been mostly rationalized from ‘promises’ by major EU political leaders to secure a bailout that would ring fence the EU banking system.
The markets appear to have even written off a potential rejection, in what seems as strong confidence that the EFSF will get through with Slovakia’s vote or without Slovakia’s participation.
In my view this seems to be a tenuous premise from which to latch a bullish perspective on. This signifies as extreme faith towards government’s ability to solve social problems by inflationism and financial repression even if the supposed panacea seem lacking the scale compared to the previous measures
And as said before there is still is a China factor to consider.
I'll be in constant vigil
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