"AP" - Leaders OK bailout funds, coordination
March 25, 2011 Associated Press
March 24, 2011
http://chronicle.augusta.com/news/business/2011-03-24/european-leaders-approve-plan-debt-crisis
BRUSSELS --- European Union leaders gave final approval early today to a raft of new measures they hope will contain the debt crisis that has rocked the continent for more than a year.
"I think today we reached a real breakthrough," European Commission President Jose Manuel Barroso said just after midnight.
Leaders signed off the size and powers of its current and future bailout funds and closer economic coordination. They had already nailed down the cornerstones of their "comprehensive solution" to the crisis over the last weeks. But they left some details, including how to ensure their existing bailout fund can actually lend out the promised 440 billion euros, for later meetings.
The summit had been overwhelmed by debate over Portugal's political crisis and Ireland's banking woes. The defeat of Portugal's minority government over planned austerity measures puts one of Europe's most financially troubled countries into political limbo just as it faces huge debt repayment deadlines.
In an effort to finally get ahead of the crisis, eurozone policymakers over the past weeks reached deals on the size and powers of their provisional and future bailout funds, and committed to improve the competitiveness of their economies by targeting wage increases and unsustainable public pension systems.
On Thursday, six non-euro states -- Poland, Bulgaria, Denmark, Romania, Lithuania, and Latvia -- announced they will also sign up to the competitiveness deal, which has been dubbed the "pact for the euro." Most of these countries are expected to adopt the euro eventually, so the pact gives them a chance to get their economies in the right shape.
But a growing unwillingness among taxpayers -- and politicians -- in some countries to bet solely on austerity measures to overcome the region's financial crisis was starting to put that strategy into doubt.
In Ireland, the new government is threatening to make senior bondholders take losses if stress tests next week reveal big capital holes in the country's banks. Irish Prime Minister Enda Kenny said he would not try to reach any new deals on his country's painful bailout with other eurozone leaders until he knows the result of the stress tests.
