Euro Zone Crisis: Why Finance Ministers Stay Up All Night

Twice in less than a month, European ministers have negotiated through the night to hammer out measures to address the debt crisis. Monday into Tuesday night, they pulled (as it were) another all-nighter to

1) offer €30 billion in immediate loans to Spain’s troubled banks
2) give Spain more time to meet its deficit targets.

Spain is actually to receive a bailout package more to the figure of €100 billion ($125 billion).

While this announcement seemed to restore some optimism with European stock indices up in the middle of the day, the euro still fell against the dollar.

Throughout Tuesday, at issue was whether bailout funds can be used directly to recapitalize Spanish banks rather than the funds first going to governments and therefore being added to their debt. Spain has been seeking to avoid the latter scenario so as not to raise its debt, understandable given some other bleak economic circumstances including land selling at 80-95 percent of its value and really high unemployment, especially for youth.

By the end of Monday, an agreement wa formally reached for Spain. It comes with strings attached including regular three-monthly examinations by the European Council as well as an increase in sales tax and raising the retirement age to 68 (pdf).

Plus, Ireland and Greece have been eyeing Spain’s deal and are likely to seek to renegotiate the terms of their bailout packages.

Meanwhile, the German constitutional court has begun deliberations as to whether the European Stability Mechanism (this is the euro zone group’s permanent bailout fund) is legal because if potentially restricts how tax money is spent.

Adding to uncertainties in Italy is Prime Minister Mario Monti planning to step down in 2013. His economic expertise has helped to steer Italy through the debt crisis but implementing the measures is a task caught up in “politics-as-usual.” After Monti’s announcement, the euro fell to 1.2236, a new two-year-low against the dollar.

It is probably not inaccurate to suspect European finance ministers, and politicians, have more long nights ahead of them.

Related Care2 Coverage

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Euro Zone Crisis: Banks Lower Rates But Confidence Stays Low

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Photo of Brussels at night by doegx

Disclaimer: The views expressed above are solely those of the author and may not reflect those of
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Kasia Y.

11:07AM PDT on Jul 12, 2012

And the SUPER WEALTHY bankers who created this problem are still alive? WHY? Why are they not publically executed? Why are there STILL NO REGULATIONS to prevent this from happening again? The rich must pay for these corrections. We must redistribute the wealth from the richest (aka least responsible) to those who need it most: smart students, innovative people in the technology sector, organic farmers, researchers in medicine and so on. I'd rather have an extra million dollars spent on cancer or aids research, or to buy books for students rather than some stupid rich executive having a new paint job on his yacht. And no I don't care what he did to get the yacht, he doesn't deserve it, not ever.

July 12
send a green star

Debbie L.

9:28AM PDT on Jul 12, 2012

Thanks for posting.

Siti R.

4:13AM PDT on Jul 12, 2012

yes Ernest, i was being sarcastic. ;-) Namaste~

Ernest R.

8:48PM PDT on Jul 11, 2012

@ Siti R.. No, it isn’t like Francis Bacon said. This crisis was from people who didn’t object at all, didn’t consult, adventured [risked] way too much, and never repented. A “mediocrity of success”? Millions of dollars of CEO yearly pay increases and obstinately refusing to pay taxes while their countrymen live on food stamps ? You were being sarcastic, weren’t you ?

July 11
send a green star

Heather M.

8:32PM PDT on Jul 11, 2012

Thanks for the update.

Toby S.

7:17PM PDT on Jul 11, 2012

I support a US Treasury Dollar as a second currency, equal to a Federal Reserve Note by law. Take the burden off of citizens for 10 years and fund needed production entrepreneurs, not financial schemes. Think how a second currency could bypass the present, corrupt parts of government.

If you think the Rothchilds of London who own 57% of the US FED 12 regional banks, make their decisions in the US citizens best interest...your a tool of the 1%.

7:13PM PDT on Jul 11, 2012

Ian F.

6:09PM PDT on Jul 11, 2012

No easy way out of overspending, over financing the overspending and then trying to repair it all in economies that aren't growing. Something has to "give" economically. This hurts the poorer sections of society. It needs taxes to be raised on the rich to offset and finance this burden. No other way round it I'm afraid.

Dominic C.

5:25PM PDT on Jul 11, 2012

Meltdown and the financial collapse of Europe and the World!