Charlemagne's notebook

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THE barber can put the scissors away for now. European politicians have given in to the tantrums of the markets: the threat of an ugly haircut for bondholders has been postponed for several years. Such is the conclusion one draws from Sunday's extraordinary meeting of European finance ministers. Whether it is enough to pacify the distressed markets as they re-open today, after dumping the bonds of the most vulnerable countries and sending their interest rates soaring, is a different matter altogether.

Ministers tried to soothe the wailing with two (actually, three) promises: first, they drew up an €85 billion ($113 billion) package [PDF] of loans for Ireland to try to quell the immediate crisis. Second, they quietly agreed to consider extending the three-year repayment period for Greece, which was bailed out in May, to match the more generous loan term for Ireland. Third, they issued a promise that, under a future mechanism [PDF] to resolve debt crises, holders of European government bonds were not in danger of losing their investment any time soon.

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Charlemagne's notebook