Business day live

Angela Merkel draws a line in the sand over so-called euro bonds.

Apart from the fact that euro bonds and euro bills and so on are unconstitutional in Germany, I believe they are economically wrong and counter productive. There are no quick or easy solutions, there is no magic formula or some coo with which the debt crisis can be overcome once and for all.

Now European leaders are back at the negotiating table in an effort to save the Eurozone.

I’m Peter Lattman reporting for Business Day Live. Later in the show we’ll be hearing from Brian Stelter about the changing price of broadband service and Amy Chozik is here to give us the latest on a potential break up of Newscorp. But first, I’m joined by Peter Evis from DealBook. Hi Peter. Hi Peter.

So as we just saw in that clip, political tensions continue to run high. We’ve got a big, some say crucial European Summit meeting in Brussels starting tomorrow. But things don’t seem all that happy as we head into it.

Yeah now, we still have Germany holding out on some key demands and you still have Italy, France and other countries still not willing to give up certain things themselves. So there definitely hasn’t been a meeting of minds before this summit.

It help us understand this Eurobonds issue that Merkel was talking about in that clip. So, Italy and Spain want a unified Eurobond issued that spans across the various countries yet Merkel’s saying that not so fast.

Yes exactly, now the great benefit of Eurobonds for a country like Italy is that they can use another people’s better credit to reduce their borrowing costs and continue to access the bond markets and fund their deficit. That’s the upside for Italy.

But Germany’s worried about giving up it’s credit without also getting control over these countries spending. So it’s like Germany’s saying look, you can’t just use our balance sheet to borrow without also allowing some central body in Europe to control your spending and that’s where the fight is.

So she’s saying countries Italy and Spain, you can’t have your cake and eat it too. Yeah that would be the German perspective. The other perspective is of course if you don’t do something quick then these countries won’t be able to borrow and then you’ll intensify the crisis and threaten the euro itself.

Huh, there’s some other financial news this morning that I wanted to touch on that spans both continents, North America and Europe, which is this news out of Barclays. So Barclays has struck a settlement with regulators here over allegations that have manipulated a key interest rate. Tell us what’s happening.

Yeah, this is a very important case because this interest rate called Libor is the basis, it’s the benchmark for putting all sorts of interest rates across the financial system so its influence is huge.

And incredibly what Barclays was doing or allegedly doing was telling…it contributes to this interest rate , it helps set this interest rate and it was set at this interest rate at a level that would benefit some traders over here. And so it was making profits out of allegedly manipulating this interest rate, which is…you know, if you read the suit it’s fascinating.

And the U.S. regulators I guess led by the CFTC and the Financial Service Authority in Britain, I think the fine is four hundred and fifty million dollars that Barclays is paying and they’ve also struck a deal with the justice department to not be prosecuted as a result of this alleged manipulation. Do you think, is this going to be the only settlement? Or are other banks being investigated?

No, there are definitely other banks that are being investigated, and some of them you know there may not be a settlement with the other ones, there might be outright prosecutions. Hmm well it will be an interesting story to watch. Thanks for coming out. Alright, thanks.



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