Sunday, 18 September 2011


Meetings on European Debt Crisis End in Debate, but Little Progress

“The problem is that the politicians seem to be behind the curve all the time,” added Anders Borg, Sweden’s finance minister. “We really need to see some more political leadership,” he said, citing a “clear need for bank recapitalization.”

http://www.nytimes.com/2011/09/18/business/global/meetings-on-european-debt-crisis-end-in-debate-but-little-progress.html


As the Greek sovereign debt crisis bears down on the eurozone - and financial leaders bury their heads over the inevitable bailout -

Martin Vander Weyer suggests how the euro's endgame will play out snip

It is apparent not only that US banks have lost confidence in their European counterparts and have started shutting them out of inter-bank funding markets, but also that US officials are busy making matters worse by seeking to shift blame for America’s dire domestic performance on to influences from this side of the Atlantic. “Seventy-five per cent of the dark things happening in the world economy are because of the eurozone,” one of Geithner’s team said at Marseille.

And it is because of that widely held sentiment in the US financial community – the belief that European banks are sitting on crippling losses on their government bond holdings, and could go down like dominoes if Greece and others default – that the central banks’ dollar funding scheme was necessary to stave off the onset of another credit crunch. Another freezing-up of the international banking system is the quickest possible way to turn current near-zero growth performance in the industrialised world into a global double-dip recession, with the second dip likely to be deeper, longer and more painful than the first.
snip

But that is for the future. For today, the lesson of the banking crisis of three years ago is that denial is ultimately useless. The moment comes when only swift, muscular and co-ordinated international action by governments provides the catharsis that quells the market panic. That moment for Europe may come in mid-October.