The good news (probably) is that Russia, China & Co. may be willing to help Spain and the rest of the European Union out of their giant debt hole. So says President Dmitry Medvedev’s chief economic advisor, Arkady Dvorkovich. Double or Quits’ IRISH central bankers and even ordinary bankers are in demand on the Continent these days as their European counterparts try to learn the lessons from our banking problems.
The bad news is: they want to see a plan from the EU on what it intends to do about this mess first.
“We are waiting for the EU to come up with its debt crisis strategy,” Mr. Dvorkovich said Monday. “We are ready to offer our help according to the strategy,” along with peers such as Brazil, China and India, he said.
Strategy, you say?
France’s Nicolas Sarkozy and Germany’s Angela Merkel had a big opportunity to give the markets just that Sunday. Instead, they promised that a plan to recapitalize banks is in the works. If we are all just that little bit patient, we’ll get the details on that by the end of this month.
http://blogs.wsj.com/source/2011/10/10/wanted-eu-strategy/
“You could basically guarantee a country’s issuance through a so-called zero-coupon bond, assuring investors their capital is not at risk,” said James Nixon, chief European economist at Societe Generale SA in London. “The great advantage is that it is leverage. It is possible it amounts to four or five times the size of the EFSF. The disadvantage is that it is essentially double or quits.”
European leaders may discuss leveraging the EFSF during an Oct. 23 meeting that gropes toward dealing with Greece’s oversized debt, insulating the Spanish and Italian markets, and shielding banks from the fallout.
http://www.businessweek.com/news/2011-10-10/ecb-backs-guarantee-option-to-magnify-europe-s-rescue-fund.html
With every day that passes, the problems of Europe's large banks resemble the problems encountered by our own banks three years ago when this crisis began.
Like neighbours who discover a crack running through a garden wall, France and Germany appear to have finally accepted that recapitalisation is inevitable although they are still squabbling over the bill.
http://www.independent.ie/opinion/analysis/our-bankers-in-demand-as-eu-dodges-debt-trap-2901459.html
Tuesday 11 October 2011
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