Per Spiegel Online
- Euro-zone finance ministers have agreed to effectively double the volume of the euro rescue fund from 2013 when it becomes a permanent mechanism. The fund will have an effective lending capacity of 500 billion euros, said Luxembourg Prime Minister Jean-Claude Juncker.
- Euro-zone finance ministers meeting in Brussels on Monday agreed that a permanent rescue mechanism to be set up from 2013 would total €500 billion euros ($675 billion) -- significantly higher than the current rescue fund.
- The new fund, the European Stability Mechanism (ESM), will be part of a package of measures European leaders are hoping to agree at two summits in March to resolve the debt crisis. Apart from the euro zone, the ESM would also get cash from the International Monetary Fund ....
- The ESM is intended to replace the temporary euro rescue fund, the European Financial Stability Facility (EFSF), which was hurriedly set up in May to avert a collapse of the single currency in the wake of the Greek debt crisis.
- The EFSF currently has a volume of €440 billion but can only lend up to €250 billion to ailing euro member states because it has to keep a large cash buffer in order to maintain top credit ratings. Juncker said the ESM's €500 billion would be the "effective lending capacity" of the new rescue fund.
But don't worry - it could get even bigger if need be. No taxpayer must be spared if there is someone to bail out...
- EU officials are worried that the current fund may not be big to cope if Portugal and Spain were to follow Greece and Ireland in needing a bailout.
Germany of course is trying to preach responsibility but they might as well be from the planet Mars. Fiscal sanity does not drive consumption or push stock markets up.
- Germany is opposing an immediate increase in the EFSF unless other euro zone member states agree to cut public spending and make their economies more competitive.
- Germany's " ", supported by France, includes higher retirement ages, a German-style "debt brake" to limit government bond issuance, a common corporate tax base and an end to inflation-linked wages. But other euro-zone countries are