EU Begins Rescue Revamp as Germany Signals Flexibility

European finance chiefs start work today on a revamped debt-crisis-fighting strategy with Germany easing its opposition to an expanded arsenal and Portugal insisting it will get by without an aid package.
Germany, the leading power in the 17-nation euro region, is eyeing a March deadline for bolstering the 440 billion-euro ($585 billion) rescue fund, drawing up a permanent aid facility and rewriting the bloc’s budget-deficit rules.
A rising euro and successful bond auctions in Portugal, Spain and Italy offered a respite last week from market pressure for steps that go beyond the emergency aid program and the European Central Bank’s unprecedented bond purchases.
“European leaders need their backs to the wall in order to complete their monetary union,” Barry Eichengreen, an economics professor at the University of California at Berkeley, said on Bloomberg Television’s “Surveillance Midday” with Tom Keene. “I’m still convinced that’s what they’re about to do.”
Germany endorsed the need for a “comprehensive” approach to stemming the debt contagion amid concern that Greece and Ireland, recipients of 178 billion euros in European and International Monetary Fund loans last year, will struggle to nurse their economies back to health.
Still, German Finance Minister Wolfgang Schaeuble resisted an appeal by the European Commission, the bloc’s central regulator, for an upgraded anti-crisis toolbox to be unveiled as soon as a Feb. 4 summit of national leaders.

http://www.bloomberg.com/news/2011-01-17/eu-ministers-begin-talks-on-rescue-revamp-as-germany-signals-flexibility.html