Europe will not offer China concessions in exchange for contributions to the eurozone’s beefed-up bailout fund, an advisor to French President Nicolas Sarkozy said on Monday. Eurozone leaders agreed in Brussels last week that emerging nations, led by China, could put money in a special purpose vehicle within the EFSF fund to help increase its firepower. French President Nicolas Sarkozy, who has said that China would have a “major role to play” in resolving the euro zone’s debt crisis, was accused over the weekend by political opponents at home of selling out Europe’s future to foreign powers. “It is out of the question to negotiate counterparties. If China comes, it’s to invest in a fund that will play an important role in global stability,” presidential advisor Henri Guaino told Europe 1 radio. The head of the EFSF (European Financial Stability Facility), Klaus Regling, was in Tokyo after trying to drum up support for the fund from Japan after he courted China. China declined to commit at the weekend to putting cash into the mooted special purpose vehicle, and Japan told Regling on Monday only that it would continue to buy EFSF bonds. Guaino said China’s interest in helping Europe to resolve its debt crisis was a positive signal. “It’s a rather good sign, it shows that everyone really feels concerned and everyone wants to avoid a global catastrophe… I don’t understand the criticisms we are hearing from all sides, it is absurd,” he said. The prospect of China contributing to […]

European officials responsible for the eurozone bailout fund commenced discussions on Friday with China to involve them in the EU rescue plan. The European Financial Stability is hoping the Chinese government will invest in a plan to help save EU member nations from their debt crises. The move comes after European leaders on Thursday clinched a new bailout deal with EU lenders to help tame Europe’s spreading debt issues. Klaus Regling, CEO of the European Financial Stability, has been holding consultations with the Chinese to decide on provisions for raising cash. China has in the past been a regular buyer of EFSF bonds. “I am optimistic that we will have a longer term relationship,” he said.

Europe’s leaders on Thursday came to agreement on a deal with EU banks to write off half of Greece’s bonds in a plan to reduce the country’s heavy debt load. The agreement, which was reached at the summit in Brussels, will also include a new €130bn bailout package between the IMF and the EU. The combined action is believed to lower the nation’s GDP to 120 percent from the current 160 percent, EU president Herman Van Rompuy said. According to the statement the eurozone members would contribute up to €30bn to the Private Sector Involvement.

The eurozone is experiencing the biggest challenge since its inception – it is currently at the worst point of the debt crisis that started two years ago. Contagion has already spread to Ireland, Portugal, Cyprus, Spain and Italy; and even France is starting to feel the pain. The crisis recently has also started to spread to the European credit institutions – which are getting a big hit on their bond portfolios – thus creating a need for further capital injections from a market that is already short of cash and reluctant to take further risk. The unwinding of fiscal imbalances, asset bubbles and over-leverage is a protracted, painful and disinflationary process. Without control of monetary policy, crisis-hit countries are forced to adopt large and unprecedented medium-term austerity measures, which, as we saw during the LDC (less-developed-country) debt crisis in the 1980s, are especially painful for the poor and underprivileged. There are examples in the past of debt crises that were successfully overcome, mainly with external help, but past episodes involved countries with the power to control their monetary policy – and in all occasions a devaluation of their currencies and/or increase of the money supply were basic steps in their struggle to regain competitiveness. However, countries in the eurozone have delegated their monetary authority to the ECB, which has the sole responsibility for the price stability of the whole euro area. With Germany, the largest partner, growing at the fastest pace since the end of the global recession in 2009 […]

ArcelorMittal, the globe’s biggest steel producer, late on Tuesday backed out of its Macarthur Coal joint $5.1bn purchase with Peabody Energy, according to the company. The group originally joined the deal, which will be the second largest coal takeover this year, to help advance its metallurgical coal supplies. The steel maker has now left partner Peabody Energy to pursue the takeover on its own, saying: “ArcelorMittal has determined that it would no longer be appropriate to allocate substantial capital to the acquisition of a non-controlling, minority business interest.” Peabody welcomed the news saying the deal will be fully accretive within 12 months, and is to be funded with cash and debt.