Euro zone making scant headway on growth and reform

By Alan Wheatley – The euro zone is finally getting a move on and slinging a safety net under the single currency. If only it were making as much headway in correcting the economic imbalances that made a rescue plan necessary in the first place.

The European Central Bank has bought time for the euro with a scheme for secondary-market purchases of bonds of countries such as Spain if they are shunned by investors. And the European Stability Mechanism is set to buy the debt as it is auctioned, after Germany‘s top court approved the establishment of the permanent rescue fund. Immediate market pressure has subsided. more> http://tinyurl.com/8nk2lhu

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With or without euro, Europe must raise its game

By Alan Wheatley – If Europe wants first-class infrastructure and a comprehensive welfare state without piling up ever more debt, governments need to shake up working habits to generate the growth that spins off tax revenues.

“Even if Europe were firing on all cylinders, it would be one of the slowest growing regions in the world,” said Douglas Roberts, chief international economist at Standard Life Investments in Edinburgh.

The rise of China and India, of Brazil and Turkey, deals a double blow to Europe.

They can manufacture more cheaply, signing the death warrant of many labor-intensive industries in Europe and keeping a lid on wages. more> http://tinyurl.com/c7rrovm

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Euro zone debt deal tackles symptoms not cause

By Alan Wheatley – The complex agreement reached in Brussels in the early hours of Thursday lends credence to the view that the euro zone will somehow muddle through. But it is not the Grand Plan that optimists had hoped for: what was the 14th summit in less than two years to tackle the crisis will not be the last.

Expressed as the “net present value” of the bonds, the proposed loss will be close to 70 percent, much more than the 40 percent hit that banks had volunteered to take, RBS said. What’s more, the EFSF will be too small to offer help to any country that might need it for any length of time. more> http://twurl.nl/67w1tm

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• Euro deal leaves much to do on rescue fund, Greek debt, Luke Baker and Julien Toyer, Reuters
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