Devaluation of Greek bonds, expansion of the bailout fund, recapitalization of banks. The goals established by European leaders during the last summit in Brussels are ambitious. The agreement arrived in extremis, late at night, but the first results have already arrived: this morning investors celebrated the agreement with the greatest possible euphoria, flooding the lists of the Old Continent with purchases.
"Today, Europe is closer to solving the financial crisis," commented the president of the European Commission, Josè Manuel Barroso. “The summit allowed us to adopt the elements of a global response, an ambitious and credible response to the crisis that the eurozone is going through”, added the French president, Nicolas Sarkozy, satisfied.
Announced protagonist of the last European summit it was Italy. The Community institutions have "favorably" welcomed the growth measures presented by Silvio Berlusconi, but at the same time have chosen to protect themselves with a sort of receivership vis-à-vis our country.
The Italian plan was included in the conclusions of the summit, in order to bind our institutions to respect the commitments made. But that's not all: the EU Commission has been given the task of "presenting a detailed assessment of the measures and monitoring their implementation". A treatment so far granted only to the countries receiving aid: Greece, Portugal and Ireland.
Now let's see in detail what the anti-crisis plans of Europe and Italy foresee:
EUROPEAN PLAN
– Devaluation of 50% of Greek bonds and new aid for Athens
At the beginning of 2012, the nominal value of Greek government bonds will suffer a cut of 50%, equal to about 100 billion euros. A much higher reduction than the 21% established in the summit at the end of July. The measure will be applied to all bonds held in the portfolios of European private banks.
In this way, in 2020, Athens' debt will return to 120% of GDP (it is currently 160%), considered a sustainable level. Greece will also receive new aid of €130 billion by 2014.
– Recapitalization of 90 European banks
By June 2012, the 90 European banks already subjected to stress tests, which will not be able to distribute dividends and bonuses, will receive new injections of liquidity. The measure will allow credit institutions (defined as "systemic") to bear the losses linked to the devaluation of the Greek debt, while simultaneously bringing their Core Tier 9 (the capital strength ratio) to a minimum of 1%.
The total cost of the operation is 106 billion euros, of which 14,7 for Italian banks. To find these resources, the banks will first have to raise their own capital, alternatively they will be able to turn to the States and only as a last resort to the EFSF.
– More than doubled the State-saving Fund (EFSF)
The firepower of the State-saving Fund is more than doubled, going from the current 440 million to around one billion euros. The new funds will be used to purchase government bonds of countries in difficulty on the secondary markets.
The strengthening of the Fund will take place through two instruments: on the one hand, guarantees of up to 20% will be provided for the issues of debt securities of countries under attack from the markets, on the other, one or more ad hoc funds (Special purpose vehicles) will be created , which will be able to benefit from the guarantees of the EFSF to attract international investments (especially those of emerging economies).
THE LETTER FROM ITALY
– Employment: revised the rules on dismissals
By May 2012, Italian companies with economic difficulties will be able to fire more easily, unilaterally and with compensation, but without any obligation to reinstate them. Thus article 8, contained in the August manoeuvre, is tightened up. For state employees, mechanisms for mobility and redundancy fund with wage reduction will also be triggered. Those who retire will not be replaced and employees will be forced to accept new workplaces and new assignments. Finally, to encourage the recruitment of young women, the apprenticeship contract will be relaunched.
– Social security: retired at age 67
Sounds new, but it's not. Even before the letter sent to Brussels, Italian law provided for raising the retirement age to 67 for all workers: men and women, in the public and private sectors. The ramp-up will start in 2013 and end in 2026.
– Disposals for 5 billion euros
The plan for the sale of public assets will be presented by the end of November, then it will have to go through the State-Regions conference. Local authorities will therefore have to define a program for the privatization of controlled companies. The goal is to raise at least 5 billion euros in three years.
– New plan for the use of EU funds
The State does not have enough resources to co-finance projects to be carried out with EU funds, as required by EU rules. For this reason, the Government intends to divert the funds currently frozen on stalled projects (about 50 billion euros) to a smaller number of investments. The "national co-financing rate" will also be reduced compared to the levels currently required by the EU (25 or 50%).
– Only a fee to reduce the debt
Those to reduce public coffers debt were perhaps the most eagerly awaited measures, but they will simply result in the creation of a "working group" by the end of the year. His task will be to establish a "comprehensive plan" to reduce the debt.
– Mortgages to young couples of precarious workers
The State will guarantee the mortgage on the first home to married couples in the event that husband and wife have a precarious contract.
– Liberalizations
Local public services and shop hours will be liberalised. Greater competition in the fuel distribution and motor liability sector.
– Some changes to the Constitution
Constitutional reforms require a long time (9 months in the best case), but the government guarantees that the implementing decrees will be passed "without delay".
Here are the changes: possibility of being elected deputies at 18 and senators at 25; halving the number of members of the two chambers; strengthening of the powers of the Prime Minister; obligation to balance the budget; elimination of constraints on freedom of initiative.
