In Between Days

by CC November 24, 2011 10:54 pm • Commentary


PARIS — Quashing recent speculation of a softening in Germany’s hard-line stance on the euro, Chancellor Angela Merkel repeated on Thursday her firm opposition either to bonds issued jointly by the euro zone countries or to an expansion of the role of the European Central Bank as quick responses to the sovereign debt crisis.

“Nothing has changed in my position,” she said at a news conference with Prime Minister Mario Monti of Italy and the French president, Nicolas Sarkozy, in Strasbourg, in eastern France.

But with signs of spreading contagion — a weak bond sale on Wednesday in Germany that lifted rates there, rates on sovereign debt rising to unsustainable levels in Italy and Spain, and interbank lending in Europe beginning to dry up — questions remained about just how long Germany can resist the persistent calls for action.

The German newspaper Bild reported Thursday that the Merkel government was inching toward accepting so-called euro bonds, at least in some form, even if the public stance remained against them, and that some of her party said there could be a trade-off for treaty changes. “We aren’t saying never,” Norbert Barthle, a legislator from her coalition, told journalists. “We’re just saying no euro bonds under the current conditions.”

That could be some time. France and Germany say euro bonds will make sense only down the road, when there is more convergence and growth, and when Paris and Berlin will not be on the hook for all the other weaker economies. France, however, wants to use the European Central Bank more aggressively to backstop vulnerable euro zone economies while they reform themselves.


AT&T said it would take a $4 billion charge in case its takeover of T-Mobile USA fails, a tacit recognition of the dwindling chances that the deal will get through U.S. regulators who say it would destroy jobs and curb competition.

The U.S. telecommunications group and T-Mobile owner Deutsche Telekom, said they would continue to pursue anti-trust approval for the $39 billion takeover from the U.S. Department of Justice, but withdrew applications to the industry regulator, for now at least.

“AT&T Inc and Deutsche Telekom AG are continuing to pursue the sale of Deutsche Telekom’s U.S. wireless assets to AT&T,” they said in a statement on Thursday, the Thanksgiving Day holiday in the United States.

The $4 billion sum includes $3 billion in cash and a book value of $1 billion for spectrum access.

Both the DOJ and telecoms watchdog the U.S. Federal Communications Commission oppose the deal, which would reduce the number of national mobile carriers to three.


ONE can almost hear the gates clanging: one after the other the sources of funding for Europe’s banks are being shut. It is a result of the highly visible run on Europe’s government bond markets, which today reached the heart of the euro zone: an auction of new German bonds failed to generate enough demand for the full amount, causing a drop in bond prices (and prompting the Bundesbank to buy 39% of the bonds offered, according to Reuters).

Now another run—more hidden, but potentially more dangerous—is taking place: on the continents’ banks. People are not yet queuing up in front of bank branches (except in Latvia’s capital Riga where savers today were trying to withdraw money from Krajbanka, a mid-sized bank, pictured). But billions of euros are flooding out of Europe’s banking system through bond and money markets.

At best, the result may be a credit crunch that leaves businesses unable to get loans and invest. At worst, some banks may fail—and trigger real bank runs in countries whose shaky public finances have left them ill equipped to prop up their financial institutions.


Microsoft Corp. (MSFT), the largest software company, has signed an agreement that lets it take a closer look at Yahoo! Inc.’s financial information to help it consider financing a bid, a person briefed on the matter said.

Yahoo’s advisers asked that bids be submitted next week, said two other people, who asked not to be identified because the talks are private. Bidders are likely to offer to buy only a minority stake in Yahoo, as they haven’t arranged financing for a full takeover, the people said. Microsoft may help finance a bid and not try to buy Yahoo outright, two people said.

Private-equity firms TPG Capital and Silver Lake also signed non-disclosure agreements to help size up a possible bid for Sunnyvale, California-based Yahoo, people close to the companies have said. Microsoft would join other investors to safeguard its Web-search partnership with Yahoo and bridge any financing gap a buyout would require, people have said.