A 'No' to Euro Bonds—But Likely Only for the Moment
CNBC "On-Air Stocks" Editor
A "no" to euro bonds—but likely only for the moment. Ahead of the Sarkozy-Merkel meeting Tuesday, the Germans, predictably, are pushing back on the idea of issuing euro bonds (bonds guaranteed by all the euro zone countries)...but don't kid yourself: that's the direction the euro zone is moving.
This time, German Finance Minister Wolfgang Schauble said there would be no euro bonds as long as each country of the euro zone had its own fiscal policy.
The argument, of course, is that European countries do not represent the same credit risk and that the threat of higher rates is a strong incentive for each country to maintain fiscal discipline.
But in Monday's Financial Times, George Soros says that very premise is wrong: "Deficit countries must be allowed to refinance their debton the same terms as surplus countries."
Europe is approaching an "all-in" moment on fiscal union. Without a doubt, the powers of the European Central Bank will be greatly expanded in the coming months, to make it possible to buy more government bonds. Ultimately, they are likely to go beyond that.
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On the news, handset maker Nokia jumps 11 percent.
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3. Transocean announced it is acquiring Norwegian deepwater driller Aker Drilling for $2.23 billion, which includes $800 million in debt. The offer is a 62 percent premium from Aker’s close on Friday, and the deal is expected to be accretive to earnings immediately.
4. Foodmaker Ralcorp rises 8 percent after it once again rejected a bid from ConAgra and instead stood by its plan to split into two companies. The twice-raised $94 a share bid was ConAgra’s third attempt to acquire Ralcorp, which unveiled its intention to split its Post cereal business from its private label unit.