Major members of Germany’s coalition government do not want to see the bailout package to support fringe eurozone states expanded, according to The Telegraph.
Those coalition members include the Vice Chancellor, Guido Westerwelle, and Otto Solms, the finance spokesman for the coalition party the FDP Free Democrats.
This could be problematic for a number for reasons. For one, it limits how much can be accomplished at today’s eurozone finance ministers meetings, as the one with the cash, Chancellor Mer kel, can’t dole out as much as might have been hoped. Second, it makes the long term position of her government on the bailout fund unstable, which could be worrying to markets.
Major European indices are trading lower today and the euro is down too. The non-bailed out PIIGS have seen their CDS widen in today’s trading.
Photo: CMA Datavision
While Germany may not be ready to expand the eurozone fund, it seems the region’s banks are already going ahead with plans for the eurozone bond, according to the FT.
This is the bailout bond that will supply the cash necessary to provide financial support for Ireland and Greece (and maybe others shortly). The appeal to investors is a AAA rating, and a yield higher than the German bund, according to the FT. Banks who are underwriting the deal will be announced this week.