EU leaders were scheduled to hold talks yesterday to try and hammer out a comprehensive plan for tackling the eurozone debt crisis, but a breakthrough is not expected until another summit on Wednesday.
“We have to take far-reaching decisions. These have to be prepared properly, I believe that the finance ministers made progress, so that we can achieve our ambitious targets by Wednesday,” German Chancellor Angela Merkel told reporters.
“The breakthrough ... will be on Wednesday,” Merkel said before meeting French President Nicolas Sarkozy and other leaders in a castle outside Brussels on Saturday.
Sarkozy, who earlier in the week sharply disagreed with Merkel over strategy, also said he hoped for a breakthrough in the middle of the week.
“Between now and Wednesday a solution must be found, a structural solution, an ambitious solution, a definitive solution,” Sarkozy said. “There’s no other choice.”
Asked whether he was confident of a deal, he replied: “Yes, otherwise I wouldn’t be here.”
To end the debt crisis that first hit Greece, eurozone countries want to tackle several issues in one go and prevent contagion spreading to Spain and Italy, whose public finances are under market scrutiny and whose borrowing costs have risen sharply.
Markets are concerned that Greek debt, forecast to reach 160 percent of GDP this year, will have to be restructured, but investors do not know what kind of losses they will have to take on their Greek portfolios.
The size of the losses private bond holders would have to suffer was the first key issue scheduled to be discussed yesterday, but a solution was not expected until Wednesday.
A Greek debt sustainability study by international lenders showed that only losses of 50 percent to 60 percent for the private sector would make Greek debt sustainable in the long term. This is much higher than the 21 percent net present value loss agreed with investors on July 21.
To have enough money to support Italy and Spain, if necessary, the eurozone wants to boost the firepower of its bailout fund, the 440 billion euro (US$612 billion) European Financial Stability Facility (EFSF).
However, public opinion in many countries is already strongly against more bailouts and further commitments to the EFSF could drag down some countries’ credit ratings, worsening the crisis.
How to raise the potential of the fund without new cash is a second key contentious point that was to be discussed yesterday, with a resolution again not expected until Wednesday.
France and several other countries would like the bailout fund to be turned into a bank, thereby -giving it access to limitless financing from the European Central Bank (ECB), but Germany and the bank itself are adamantly opposed.
The most likely solution seems to be that the EFSF will guarantee a percentage of new borrowing by Spain and Italy in a bid to improve market sentiment towards those countries.
Such a solution might help ring-fence Greece, Ireland and Portugal — the three countries already cut off from the market and using eurozone emergency loans.
The other measure on the summit agenda is the recapitalization of Europe’s banks, many of which hold large portfolios of Greek, Portuguese, Irish, Spanish and Italian debt.
Unless they get more capital to cover potential losses on those bonds, other banks would remain reluctant to lend to them on the interbank market, triggering a liquidity crunch, currently prevented only by the stepped-up ECB liquidity provisions.
The European Banking Authority told EU finance ministers on Saturday that if all such bank assets were valued at market prices, EU banks would need 100 billion euros to 110 billion euros of new capital to achieve a 9 percent core tier 1 capital ratio, an EU source familiar with the discussions said.
After their meeting on Saturday, the ministers agreed to give banks until June next year to achieve this capital ratio, using their own funds or those from private investors, and if that failed, public money from governments or the EFSF.
Although bank recapitalization was scheduled to be discussed by EU leaders yesterday, the EU source said it was unlikely an overall sum for the recapitalization of EU banks would be explicitly mentioned.
SEMICONDUCTORS: The German laser and plasma generator company will expand its local services as its specialized offerings support Taiwan’s semiconductor industries Trumpf SE + Co KG, a global leader in supplying laser technology and plasma generators used in chip production, is expanding its investments in Taiwan in an effort to deeply integrate into the global semiconductor supply chain in the pursuit of growth. The company, headquartered in Ditzingen, Germany, has invested significantly in a newly inaugurated regional technical center for plasma generators in Taoyuan, its latest expansion in Taiwan after being engaged in various industries for more than 25 years. The center, the first of its kind Trumpf built outside Germany, aims to serve customers from Taiwan, Japan, Southeast Asia and South Korea,
Gasoline and diesel prices at domestic fuel stations are to fall NT$0.2 per liter this week, down for a second consecutive week, CPC Corp, Taiwan (台灣中油) and Formosa Petrochemical Corp (台塑石化) announced yesterday. Effective today, gasoline prices at CPC and Formosa stations are to drop to NT$26.4, NT$27.9 and NT$29.9 per liter for 92, 95 and 98-octane unleaded gasoline respectively, the companies said in separate statements. The price of premium diesel is to fall to NT$24.8 per liter at CPC stations and NT$24.6 at Formosa pumps, they said. The price adjustments came even as international crude oil prices rose last week, as traders
SIZE MATTERS: TSMC started phasing out 8-inch wafer production last year, while Samsung is more aggressively retiring 8-inch capacity, TrendForce said Chipmakers are expected to raise prices of 8-inch wafers by up to 20 percent this year on concern over supply constraints as major contract chipmakers Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) and Samsung Electronics Co gradually retire less advanced wafer capacity, TrendForce Corp (集邦科技) said yesterday. It is the first significant across-the-board price hike since a global semiconductor correction in 2023, the Taipei-based market researcher said in a report. Global 8-inch wafer capacity slid 0.3 percent year-on-year last year, although 8-inch wafer prices still hovered at relatively stable levels throughout the year, TrendForce said. The downward trend is expected to continue this year,
POWERING UP: PSUs for AI servers made up about 50% of Delta’s total server PSU revenue during the first three quarters of last year, the company said Power supply and electronic components maker Delta Electronics Inc (台達電) reported record-high revenue of NT$161.61 billion (US$5.11 billion) for last quarter and said it remains positive about this quarter. Last quarter’s figure was up 7.6 percent from the previous quarter and 41.51 percent higher than a year earlier, and largely in line with Yuanta Securities Investment Consulting Co’s (元大投顧) forecast of NT$160 billion. Delta’s annual revenue last year rose 31.76 percent year-on-year to NT$554.89 billion, also a record high for the company. Its strong performance reflected continued demand for high-performance power solutions and advanced liquid-cooling products used in artificial intelligence (AI) data centers,
RSS