I’ll give it to you country by country.
Greece: It’s official. The bond exchange that Felix Salmon calls “the largest sovereign default in the history of the world” is not a default in the sense of being a that would trigger credit default swaps. Felix Salmon argues that this controversial decision is technically, given the nature of credit default swaps, actually the right call.
All the ratings agencies have downgraded Greece based on the debt swap, but that was pretty much expected, and in any case, it’s not exactly as if people are relying on ratings agencies these days to figure out whether Greece is credit worthy.
Prime Minister Lukas Papademos, who has, is about Greece’s future after the EU summit, seeing a recovery in 2013.
An article in the German manager magazine argues that , though Greece is far from an end to its lasting recession, there’s a small sign of hope in increases in exports, not just cheese, olive oil, and wine, but also raw materials like copper and aluminum.
Portugal: Statement by the EC, ECB, and IMF on the Third Review Mission to Portugal (“The programme is on track, but challenges remain.”)
… Unlike Greece, they write, implementation of reforms is not an issue with Portugal. And indeed, the government is expected to meet its 2011 target of a 5.9 per cent deficit.
It’s how it got there that’s the problem….
Ireland: Ireland, the EU’s favorite periphery pin-up success story, is planning to hold a referendum on the new fiscal compact. Ireland has done this a couple of times in the past, with treaty changes. This time, Brussels is worried.
Any state which fails to ratify the new pact, which comes into effect once 12 states have ratified, will lose the right to future EU bailouts.
Diplomats in Brussels have also warned that a rejection of the treaty would have serious consequences for Ireland because European payments for the EU/IMF bailout would be halted.
However, an opinion poll reports that Irish voters back the EU treaty by a large margin.
Spain: Rajoy loosens his belt.
THE king of orthodoxy has crumbled. Faced with an inherited budget deficit that was way off target, Spain’s Mariano Rajoy has rebelled against this year’s European Union-agreed objective. Instead of bringing his country’s deficit down to 4.4% of GDP, Mr Rajoy’s centre-right People’s Party (PP) government is aiming for a gentler 5.8%.
It has taken little more than two months in government for Mr Rajoy to complete his transformation from gold-star pupil of Europe’s austerity warriors to chief rebel. In that time Spain has begun to dip into a second recession. Unemployment has raced to 23% of the workforce and beyond, the highest figure in the EU. February saw a further 112,000 Spaniards added to the ranks of the jobless….
Italy: Supplied with a cabinet that he had more choice in selecting than Papademos and an economy less severely in recession, Italy’s new technocrat Prime Minister has had more success in turning Italy around than his Greek equivalent. Mario Monti, Italy’s global player with the ear of Obama and Merkel has been “garlanded with the kind of praise that may elevate hope over reality as he grapples with the third biggest sovereign debt in the world.” So far, so good. The latest news is that Italy’s deficit has narrowed more than expected.
But will Monti’s success take the pressure off for needed reforms in Italy?
… The risk is that while the country may already have avoided a spiraling debt crisis, without greater deregulation and labor market flexibility it may remain in the low-growth, high-debt trap in which it has floundered for well over a decade.
Legislation to put an end to old privileges in the services industry has been the object of a lengthy tug-of-war by rival factions in the Senate, and it has been watered down.
Taxi drivers thwarted an attempt to liberalize the issuing of new licenses to make the sector more competitive. This power remains with city mayors instead of in the hands of a new Transport Authority less susceptible to pressure by the powerful taxi lobby, as the government had proposed….
The EU summit: The EU countries signed the fiscal pact (with the exception of the Czech Republic and the UK) and agreed that the EU rescue fund money should be distributed more quickly.
They alsoas a candidate for membership.