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Eurointelligence Daily Briefing: Has Socrates misrepresented the agreement? The actual memorandum suggests harsh tax increases, and a two year economic contraction.
The FT has seen a copy of the rescue deal, which suggest that the adjustment is far bigger than what Socrates seemed to suggest; there will be special taxes on pensions, and welfare benefits, freezes on pensions and public sector pay, and dismissal reforms; includes a forecast of a contraction of 1.5%-2% for 2011 and 2012 each; Reuters writes that the final size of the package may be higher than €78bn, depending on the capitalisation needs of the banks;Portugal's opposition said it will accept the package; the ECB's governing board meets in Finland today, as observers are sharply divided over whether the next rate rise will come in June or July; euro/dollar shoots up; Enda Kenny says an announcement on Ireland's interest rate reduction will come after the agreement on the Portugal rescue package - without any concession on corporate taxes; Ireland's fiscal position improved during April; Ireland, Germany and the UK spent the most money on bank rescues in the EU; a sighting of DSK in a Porsche is making headline news in the French media; Merkel is reportedly hopping mad about the number of Italians running important EU-level economic jobs; Xavier Fidal Folch compares the euro rescue to the stone of Sisyphus - rolling down once it reach the top; Holger Stelzner said the rescue operations have been unsuccessful, and that only structural reforms will work; Thomas Hanke says the cut in interest rates on the Greek loan already constituted a form of restructuring; Wolfgang Proissl says Jens Weidmann could be the next ECB president - after Draghi.
(Google link)

Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Thu May 5th, 2011 at 04:34:16 AM EST

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