• Sweden edition
 
Reinfeldt: danger not over for the euro

Reinfeldt: danger not over for the euro

Published: 27 Oct 2011 11:05 GMT+02:00
Updated: 27 Oct 2011 15:34 GMT+02:00

"There is a lot left to do," Reinfeldt said.

After extended negotiations that ended only 4am on Thursday morning the group of tired leaders from the eurozone countries announced that they had a deal.

French President Nicolas Sarkozy was first out to inform that the banks had agreed to a 50 percent debt reduction for Greece.

Sarkozy acknowledged that all details are not in place yet, a sentiment shared by his Swedish counterpart.

One of the issues Reinfeldt argued, which remained to be resolved is how the eurozone countries would go about boosting the war chest of crisis fund to €1,000 billion.

"Some steps have been taken and there are grounds for cautious optimism, but one must also note that there is much left to do," Fredrik Reinfeldt argued at a press conference in Stockholm.

He pointed out that the final document of the euro summit contained clear challenges to the countries affected by debt that they have a responsibility to clean up their economies.

The document furthermore includes projections on strengthening the emergency fund, the goal of reducing the Greek debt by 2020 and the recapitalization of banks.

Sweden's finance minister Anders Borg expressed "cautious optimism" over the deal while pointing out the demands on Swedish banks to improve capitalization.

"For the Swedish banks this means that they have such strong profitability, so that if they retain profits for several quarters they are at that level," Borg said.

Borg also commented on the planned strengthening of the rescue fund EFSF.

"This is a very powerful upgrade of EFSF. It is clear that there it is sufficient to go far," he said.

The settlement was earlier described as a "positive step forward" by Swedish economists.

Robert Bergqvist, chief economist at Swedish bank SEB is among those hailing the announcement early of the deal early Thursday morning after a tough night of negotiations.

"It's a step forward, but the content is not really surprising," he told the TT news agency, and is backed by other analysts.

At the end of overnight negotiations it emerged that the banks agreed to write down Greece's debt by half, and the emergency European Financial Stability Facility (EFSF) is to be strengthened up from the current €440 billion to 1000 billion.

At the same time Bergqvist warned of the effects of how quickly the new, stricter capital adequacy requirements for banks should be implemented.

"The schedule is a little too tough and could pose a threat to growth, which should be avoided," he said, although stressed that he understood the objectives.

Bergqvist underlined that it is now up to EU ocuntries to restore confidence in the market by establishing credibility in the decisions taken.

"If the politicians change the rules along the way investors will think again over whether they should lend to heavily indebted countries," he said.

The SEB economist concluded that there remained a number of problems for the EU countries to tackle.

"I am afraid that this we stand not at the end but at the beginning of a long and difficult process."

That euro area countries would agree on rescue package was expected and is positive, according to Swedbank's chief economist Cecilia Hermansson.

"But then there are many details that remain. A sufficient number of banks have to want to participate in this initiative and there are some details to work out," she said.

"This also applies to the support fund, including how to use the insurance component in order to increase their leverage in the fund and how to get funding from, for example, China and elsewhere."

The market's immediate reaction, as reflected in the Asian stock exchanges leading indices, was also no big leap of joy, but the indices did climb upwards.

TT/The Local/pvs (news@thelocal.se)

Your comments about this article

09:06 October 27, 2011 by zircon
For State Finance, actually historical accountancy, doesn't do memory system.
09:26 October 27, 2011 by the fonz
Anybody who thinks this is the solution to this mess is gravely mistaken. These heavily indebted countries simply cannt produce enough to pay their way in the Euro. When they had their own currencies, they would fluctuate to aid the real value of their economies - that particular release valve is closed and the debt bubble keeps on growing and growing. Like everything in life - when the pressure gets too high - something has to give. And it will.

RIP Euro.
12:16 October 27, 2011 by Svensksmith
You can always trust a banker.
14:10 October 27, 2011 by skogsbo
each Euro nation has slightly different problems, so spend too much, other have too low taxes, some are just corrupt with people dodgying tax, unemployment or no production. A blanket solution won't work, each country needs to get grip and be responsible for itself, the safety blanket of the Euro will fall away soon if there don't. Northern Europe will survive, but the Latin countries, Ireland and Greece will turn into instant 3rd world nations.

Bankers aren't the problem, here corrupt/ tax dodging business men and lying / incompetant politicians when they fudged euro entry are cheifly responsible. Most of the problems were visible 5 years ago, they just take time to manifest themselve to the point where they can't be glossed over anymore.
14:49 October 27, 2011 by GLO
This is a planned failure, remember this time! Nothing has changed they will continue ......Ineptocracy (in-ep-toc'-ra-cy) - a system of government where the least capable to lead are elected by the least capable of producing, and where the members of society least likely to sustain themselves or succeed, are rewarded with goods and services paid for by the confiscated wealth of a diminishing number of producers
17:47 October 27, 2011 by Acero
Such valid points by the fonz (a name everyone loves) and skogsbo, but with some lines of pure stupidity.

"..but the Latin countries, Ireland and Greece will turn into instant 3rd world nations."

Greece has never been anythin BUT a 2nd world nation at the very best of times. Ireland, in a way is the cousin to Iceland...lots of good points but wont ever really (bless them) be a REAL economy.

It comes down to what the fonz said about the release valve of a currency defltion. Its what a country needs..and without it there will always be papering over of cracks. Italy, Ireland, Germany and belgium are all very different countries....but are all being told to speak the same language. Not gonna work in the longer term sadly but it was nice not changing money there for a while
05:59 October 30, 2011 by Ron Pavellas
Perhaps my eyes glazed over at critical places, but the effect on Sweden seems clear as mud. Having read other reports I know what others here know: the deal doesn't address the underlying problem. It's a "kick-the-can" ploy again. Where does the €1,000 billion fund come from? Government promises? Will Sweden throw money at this? It'll disappear. We wisely (or inadvertently) voted to stay out of the EMU, but will we be dragged in anyway just by being connected commercially with EMU members? Will an economist (not a politician) please explain?
Today's headlines
Science
Swedish women in two-year sex pill study
Contraceptive pills have been linked to mood swings. Photo: Shutterstock

Swedish women in two-year sex pill study

Three hundred women from across Sweden are taking part in a study designed to demonstrate that modern contraceptive pills don't lead to decreased libido or mood swings. READ  

National
Stockholm 'sinking' oil spill ship safe
The ship was rescued on Thursday. Photo: Swedish Coast Guard

Stockholm 'sinking' oil spill ship safe

After fears a ship carrying around 52 tonnes of oil could sink in Stockholm's archipelago, Sweden's Coast Guard said the vessel had been towed to safety. READ  

National
Dog attack policewoman acquitted on appeal
A scene from a video of the attack published by Dagens Nyheter

Dog attack policewoman acquitted on appeal

A policewoman accused of letting her dog attack a drunk man while she repeatedly hit him with a baton, has had her conviction overturned by a court in Stockholm. READ  

Entertainment
What's On: October 31st - November 7th
Uma Thurman will soon be on her way to Stockholm. Photo: TT

What's On: October 31st - November 7th

Halloween fun and an international film festival are the big events hitting Stockholm this week. We cast our eye over the capital and the rest of the country for the best activities to check out this week. READ  

International
Pirate Bay Swede found guilty in Denmark
Gottrid Svartholm Warg. File photo: TT

Pirate Bay Swede found guilty in Denmark

Sweden's Pirate Bay Founder Gottrid Svartholm Warg was found guilty of hacking crimes in a Danish court on Thursday. READ  

National
Malmö loses out as rare toads move in
The European green toad. Photo: H. Krisp (WikiCommons)

Malmö loses out as rare toads move in

After a rare species of toad moved into southern Sweden's Malmö, builders have had to tone down massive expansion plans in the area. READ  

Politics
Palestine recognized as state by Sweden
Sweden's Foreign Minister is Margot Wallström. Photo: TT

Palestine recognized as state by Sweden

The Swedish government has officially decided to recognize Palestine, with the move announced in a speech by the country's new Foreign Minister Margot Wallström. READ  

Interview
Stockholm's shocking take on Halloween
For ten days, Globen is transformed into a giant pumpkin. Photo: Shockholm

Stockholm's shocking take on Halloween

American Bill Schacht missed the spooky outfits, family feasts and charity events he associated with Halloween when he moved to Sweden. So he did something about it. The Local meets the founder of the capital's annual Shockholm parade. READ  

Business & Money
Huge losses for energy giant Vattenfall
A Vattenfall plant in Germany. Photo: TT

Huge losses for energy giant Vattenfall

Swedish energy company Vattenfall has reported losses for the third quarter in a row. READ  

International
Malala donates prize winnings to Gaza
Malala receives the Children's Prize from Queen Silvia. Photo: TT

Malala donates prize winnings to Gaza

UPDATED: Girls' rights champion Malala Yousafzai, who was in Sweden to accept the World's Children's Prize on Wednesday, said she would use all her winnings to help rebuild schools in war-ravaged Gaza. READ  

RECEIVE OUR NEWSLETTER AND ALERTS
Business & Money
Get your own office in Gothenburg or Stockholm - free for a day
Gallery
People-watching: October 30th
National
Sweden remains fourth best for gender equality
National
Timeline: Julian Assange sex allegations
Sport
World Cup ski race on 'fake' Stockholm slope
Blog updates

29 October

Scariest day (Blogweiser) »

"This is what’s frightening me on Halloween. http://www.youtube.com/watch?v=D4OFZVCu8J0&list=UUJu5J7jG4uoYSjWbpFsJBuQ Follow my posts on FB. ..." READ »

 

24 October

Editor’s blog, October 24th (The Local Sweden) »

"Hi readers, Get ready to read our weekly digest of Swedish news in less than 60 seconds. The..." READ »

 
 
 
Society
An Arctic tradition: hunting and handicraft
Society
Stockholm taxis offer free therapy sessions
National
The Local meets Health Minister Gabriel Wikström
Gallery
Property of the week: Österåker
Society
Homeless turtles get Stockholm police ride
National
Construction worker has 'Sweden's best beard'
National
Italian musician jazzes up Sweden's Lapland
Gallery
Zlatan's career in pictures
Finest.se
Gallery
People-watching: October 25th and 26th
Lifestyle
'Swedes are funnier than they think'
National
Swedish town 'like Venice' after heavy rains
Lifestyle
What's On in Sweden: October 24th - 31st
Gallery
People-watching: October 22nd
Gallery
In Pictures: Prince Carl Philip and Sofia Hellqvist
Lifestyle
Eight things to love about renting a Swedish apartment
National
Vasa ship cannon blasted in Sweden
National
Sub hunt: Day-by-day
National
Sub hunt: Stockholm islanders share their fears with The Local
Sponsored Article
The best options for oversea transfers
National
Dentist gives free care to Roma beggars
Gallery
Property of the week: Malmö
Gallery
PHOTOS: 'Foreign activity' in Swedish waters
TT
Society
QUIZ: How good is your Swedish?
Society
The nudity... and nine other things expat men notice in Sweden
Gallery
People-watching: October 15th
Gallery
Your views: Should outdoor smoking be banned in Sweden?
Business & Money
Sweden has 'large hole' in finances
Sponsored Article
Introducing... Finding a job in Stockholm
Society
Monster salmon caught in northern Sweden
Gallery
Property of the week: Lorensberg
National
Scandinavia's child bride
National
Ebola crisis: How is Sweden preparing?
Business & Money
How Sweden is becoming a cashless society
Gallery
Stockholm Burlesque Festival 2014
National
How a little red horse became a symbol for Sweden
Gallery
People-watching: October 12th
Business & Money
The hottest start-ups from southern Sweden
National
Stockholm is 'best' region for well-being
Gallery
People-watching: October 8th
National
Five facts to know about Patrick Modiano
Sponsored Article
How to catch the first lobster of the year
Team SCA
Sponsored Article
All-female SCA team takes off on Volvo Ocean Race
Latest news from The Local in Austria

More news from Austria at thelocal.at

Latest news from The Local in Switzerland

More news from Switzerland at thelocal.ch

Latest news from The Local in Germany

More news from Germany at thelocal.de

Latest news from The Local in Denmark

More news from Denmark at thelocal.dk

Latest news from The Local in Spain

More news from Spain at thelocal.es

Latest news from The Local in France

More news from France at thelocal.fr

Latest news from The Local in Italy

More news from Italy at thelocal.it

Latest news from The Local in Norway

More news from Norway at thelocal.no

1,005
jobs available
Swedish Down Town Consulting & Productions
Swedish Down Town Consulting & Productions is an innovative business company which provides valuable assistance with the Swedish Authorities, Swedish language practice and general communications. Call 073-100 47 81 or visit:
www.swedishdowntown.com
PSD Media
PSD Media is marketing company that offers innovative solutions for online retailers. We provide modern solutions that help increase traffic and raise conversion. Visit our site at:
http://psdmedia.se
If you want to drink, that’s your business.
If you want to stop, we can help.

Learn more about English-language Alcoholics Anonymous in Sweden. No dues. No fees. Confidentiality assured.
AA-EUROPE.ORG/SWEDEN