Markets await the vote of the Slovakian Parliament to approve the expanded EFSF, the last country of the 17 euro members to do so. After the head of the opposition party said he would vote yes on a 2nd vote if the 1st vote failed, it eased concern of a failure of passage. Assuming no surprises, attention has shifted to what comes next and DJ is quoting an EU senior official saying finally, “The discussion is on a haircut, how big it needs to be and whether sovereign creditors may be involved.” Last night Juncker, who heads the euro finance ministers, said a 60% cut may be necessary but his spokesman said he didn’t mean to give an exact figure and only meant to say it would be above 21%. Either a debt swap or outright haircut will be the two options. The ECB will certainly be pushing for the former since their balance sheet is polluted with junk sovereign debt. Once a decision is made amongst the parties involved, the focus will then be on containing the collateral damage both to other sovereigns and to the banks that hold sovereign debt. Also today, the troika today will release their decision on whether Greece behaved enough to get their next allowance check and release of it is expected. In the first monetary step of an Asian central bank to reverse the economic concerns, Indonesia unexpectedly cut interest rates by 25 bps to 6.5%, reversing its Feb hike. China’s sovereign wealth fund bought Chinese bank stocks in the secondary market, news of which was announced after the Shanghai index close but before the Hang Seng closed

Category: MacroNotes

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3 Responses to “Let’s go Slovakia”

  1. On Tuesday October 11, 2011, 6:24 pm

    BRATISLAVA, Slovakia (AP) — Slovakia’s Parliament rejected a key euro bailout bill Tuesday, threatening Europe-wide efforts to ease a debt crisis that is threatening the global economy. The vote triggered the collapse of the government, but the outgoing prime minister and her main opponent both said they would now work to approve the bill quickly.

    The agreement to talk came shortly after parliament voted against an expanded euro bailout fund — a vote that Prime Minister Iveta Radicova had tied to a confidence measure. Parliament is scheduled to convene again Thursday, but it is not clear when another vote might be held.

    The eyes of officials and investors around the world are on the small central European country, because expanding the fund requires the approval of all 17 countries that use the euro currency. Sixteen countries have already approved, and now Slovakia — with a population of just 5.5 million people — holds in its hands the fate of a measure that will affect all Europe, and by extension, the global economy.

    But the statements of the country’s leading politicians late Tuesday left little doubt the Slovakian Parliament will approve the measure soon.

    “We decided that we have to do it as soon as possible,” Radicova said after announcing her party will hold talks with the primary opposition party, led by former Prime Minister Robert Fico.

    Fico took much the same line.

    “Slovakia has to approve the fund,” he said.

  2. rktbrkr says:

    Those Slovaks are still wild & crazy guys!

    Heard a talking head on Bloomberg say the Greek haircut would be in the range of 60%-80%, that sounds like a military style buzzcut!

    I assume the Slovaks will be able to squeeze something out of their fellow euros for reversing their vote. Everybody will want to vote last in these bailouts