EU hints might indulge Norway on bank account guarantees

Submitted by Mark J. Grant, author of Out of the Box,

BRUSSELS – The European Union reached a landmark deal on Thursday to make the European Central Bank the bloc’s top banking supervisor, giving EU leaders greater confidence that they are gaining the upper hand over the eurozone’s debt crisis. EU finance ministers forged a deal on the single supervisor in the early hours of Thursday after marathon talks. Leaders will give their stamp of approval at a summit starting later in the day, their last of 2012, and also discuss closer fiscal ties for their troubled currency area.

Winning the Summit but Losing the War German chancellor Angela Merkel was the EU Summit Winner. She gave next to nothing to Italy and France, and a pittance to Spain. However, there was a price to that pittance, and it could cost Merkel dearly. Please consider German Party Leader Threatens To Axe Coalition

In yet another victory for not bowing to the great-and-good of modern orthodoxy, Iceland has won a court ruling that enables it to repay billions of Euros (in failed bank deposits to the UK and Holland) on its own terms. Icesave collapsed in 2008 and left thousands of depositors, who had chased higher yielding deposits, with losses. The Dutch and British governments demanded prompt payment; Iceland denied, preferring (rationally) to repay what they could from the then-bankrupt entity.

Proactive Investor submits: Signs of contagion spreading across debt markets in Europe led by Ireland instilled jitters around the world. Yielding to pressure from European counterparts, Ireland agreed to accept a bailout package from the European Union. Similar concerns have engulfed Portugal and Spain. European debt markets are likely to leave a sour note over the coming few weeks. Flight to safety may further propel precious metals to end 2010 at a record high.

OTTAWA — Ordinarily, a speech by anyone other than Canada’s top central banker would not garner much attention. But when that person is seen as Mark Carney’s heir apparent, people take notice — even when the event is off the beaten media path. So it was Thursday, when Tiff Macklem, the Bank of Canada’s No.2 policy chief, addressed a university audience in Kingston,Ont. What did he have to offer? Not much new or substantive, and no hints of policy changes to come.

John Lounsbury submits:Gwen Robinson reports at ft.com that the EU (European Economic Union) has set up an emergency funding facility of up to €500bn to support loan guarantees and credit in Europe. The IMF (International Monetary Fund) has added an additional €220bn. This brings the total from these two sources to approximately $960 bn, significantly larger than the U.S.