Angela and Wolfgang - still not making friends
You can see why Chancellor Angela Merkel and Finance Minister Wolfgang Schäuble are back-pedalling so frantically over the EU summit deal.
While Mrs Merkel seemingly agreed to let the European Stability Mechanism (bail-out fund) rescue banks directly – starting with Spain – she did not have the authority from the Bundestag to do so.
Indeed, she violated a categorical prohibition by the budget committee or Haushaltsausschuss.
Here is the wording of Amendment 2 to the finance law or Finanzierungsgesetz on the 26th June, the day before the Brussels summit, sent to me by a very well-informed German reader.
Finanzhilfen zur Rekapitalisierung von Finanzinstituten einer Vertragspartei schlieren Finanzhilfen an eine Einrichtung zur Stabilisierung des Finanzsektors MIT ein, wenn die sektorspezifische Konditionalität gewährleistet ist, keine direkten Bankrisiken übernommen werden und die Rückzahlung durch eine Garantie der Vertragspartei gesichert ist.
It states that the ESM may not be used to recapitalise banks directly. Any such loans must guaranteed by the signatory to the treaty, ie the sovereign state, piling up further public debt.
Chancellor Merkel is wading into deep waters here. The constitutional court ruled last September that the government must obtain prior approval from the Bundestag before committing to further bail-outs – at least that is how I understood it, as did the key committees in parliament (German readers will correct me if I am wrong).
She has basically overstepped her authority.
Yes, she was under massive pressure from the Latin Bloc, Washington, Beijing, and the IMF to do so. One can certainly sympathise.
In my view, direct bank recapitalisation is indeed a crucial step that must be taken to break the diabolic nexus between banks and sovereigns – each dragging the other down – if Europe's leaders wish to hold the euro together and save their project. (Not my wish particularly, since I think the best solution would be for Germany and its satellites to leave EMU. But if your aim is to save monetary union, then damn well save it).
However, leaders get into great trouble when they trifle with parliaments. That is why Mr Schäuble was arguing on Tuesday that there had been no summit agreement on this issue, contradicting a categorical assertion by the European Commission.
What is an bond investor in China, Japan, the US, Canada, or Abu Dhabi supposed to make of this interminable shambles?
HSBC to apologize at U.S. Senate money laundering hearing: memo - Reuters
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Senators favor Pakistan money with lines reopened - AP - msnbc.com
WASHINGTON — Pakistan should get $1.1 billion in U.S. funds that have been held up for months now that Islamabad has reopened crucial NATO supply lines to Afghanistan, top senators said Tuesday.
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A major obstacle to releasing the money was removed last week when Secretary of State Hillary Rodham Clinton apologized to Pakistan for the killing of 24 Pakistani troops last fall and Pakistan, in return, agreed to reopen the overland supply lines to U.S.-led coalition forces. Congress has already approved the money to reimburse Pakistan for counterterrorism operations, but it has been on hold for some six months.
Armed Services Committee Chairman Carl Levin, D-Mich., and one of the panel's top Republicans, Lindsey Graham of South Carolina, said the money should be released, albeit reluctantly.
"They don't deserve it. What they've done is presumably earned it by the amount of money they've laid out in terms of their anti-terrorist activity and protecting our lines," Levin told a group of reporters.
He said he would vote to approve the release.
The Pentagon intends to submit $1.1 billion in approved requests for reimbursement of money the Pakistan government has spent on counterterrorism operations that were incurred largely along the border.
"If our commanders believe that releasing the funds helps the war effort — yes. I don't want to second guess these people," Graham said. "Pakistan on a good day is very hard. It is an unreliable ally. You can't trust them, you can't abandon them. The biggest beneficiary is the men and women fighting the war. And I want Pakistan to be stable. And if the money helps them become more stable, good.
"If you cut the money off, what leverage do you have? There may come a day when we do that, but not yet," he said.
Sen. Rand Paul, R-Ky., is pushing for a vote later this month to cut off future funds. That vote is contingent in part on what Pakistan does in the case of Shakil Afridi, the doctor who helped the United States track down Osama bin Laden but was convicted and sentenced to 33 years for high treason. Afridi ran a vaccination program for the CIA to collect DNA and verify bin Laden's presence at the compound in Abbottabad where U.S. commandos found and killed the al-Qaida leader in May 2011.
His appeal trial is scheduled for July 19.
Moira Bagley, a spokeswoman for Paul, said it was unclear whether the Senate would get a vote on the reimbursement money because the funds have been appropriated.
Lawmakers have shown their frustration with Pakistan on future budget requests. In May, the Senate Appropriations Committee voted to slash millions in foreign aid to Pakistan from the Obama administration request for the fiscal year beginning Oct. 1.
Members of Congress have questioned Islamabad's commitment to the fight against terrorism and resentment still lingers on Capitol Hill more than a year after bin Laden was killed deep inside Pakistan.
Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
Poland's finance minister opposes state aid for builders - Reuters
Thomson Reuters is the world's largest international multimedia news agency, providing investing news, world news, business news, technology news, headline news, small business news, news alerts, personal finance, stock market, and mutual funds information available on Reuters.com, video, mobile, and interactive television platforms. Thomson Reuters journalists are subject to an Editorial Handbook which requires fair presentation and disclosure of relevant interests.
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Poundland appoints Andrew Higginson of Tesco as chairman - Daily Telegraph
Most city analysts believe that Poundland could be worth at least £500m. Clive Black, at Shore Capital, said: "The market likes well-run, growth stories. Its shares would expect to trade on a decent premium to the retail sector. About half a billion would be less than 1.5 times sales, so it could be worth more than that."
The company filed its full accounts for the 53 weeks to the end of April at Companies House this week. It shows that the retailer increased its sales by 22pc to £780m and pre-tax profits jumped 52pc to £32m.
Nick Bubb, a long-standing retail analyst, said: "There are many in the City who got their fingers burnt with supposedly fast-growing retail stocks coming to market, such as Supergroup. But if it's growing fast a multiple of 15 to 20 times seems reasonable." That would value the company at between £480m to £640m.
Mr Higginson, 54, officially retires from the retailer in September, but he has been winding down his duties in recent months and last week was appointed chairman of N Brown, the catalogue retailer. He wants to establish a "portfolio" career.
He said his 24-year-old daughter was a regular Poundland shopper and he had been a long-term admirer of the business. "I think they are fantastic value. And they are just right in terms of relevance today. I think it has lots of growth available to it, both in the UK and in Ireland."
He said he hoped his experience of strategy and running international businesses would help Poundland.
Mr Higginson, who would not disclose how much slice of the company he was being given as payment, replaces Colin Smith, the former head of Safeway supermarkets, who has been Poundland's chairman for the last decade.
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