— The Erimtan Angle —

The European Union Summit ended with a final plan to address the eurozone debt crisis. It aims to help struggling banks and control borrowing costs (29 June 2012).

The Los Angeles Times reports that ‘European Union leaders surprised and impressed markets worldwide Friday [, 29 June 2012] by taking unexpectedly decisive action to boost confidence in the struggling euro common currency at a summit where little had been expected except impasse and discord. At the urging of heavily indebted Spain and Italy, the presidents and prime ministers of the 27 EU nations agreed to let the European Central Bank use its surplus cash to recapitalize insolvent Spanish banks and to buy Spanish and Italian government bonds at interest rates vastly more affordable for those two nations, officials told reporters in Brussels after their two-day meeting. The moves were expected to spare Italy and Spain from paying such high costs to borrow money that they would have to seek bailouts for their national treasuries, a prospect that would likely overwhelm the EU’s emergency rescue funds. They are the third- and fourth-largest economies in the 17-nation Eurozone, which shares the euro currency’.[1]

APM’s Marketplace presenter Kai Ryssdal says it like this: “When you get right down to it, this has been a pretty good week for the economy — risk-wise — both here and over in Europe. That’s actually saying something, given the peril Europe could possibly hold”.[2]  In a somewhat grim voice, CNBC’s senior editor John Carney adds that “We are done for a few days, but by Monday, what people are going to see is that there’s a promise, but the promise to bail out the banks is based on a lot of contingencies, a lot of things that have to be agreed upon that are not yet agreed upon — like a bank supervisor. They’re going to create an entirely new regulatory apparatus before they will do the bank bailout. I mean, we’ve seen how long it’s taken to implement Dodd-Frank here, and we already had the regulators. They want to create entire new ones — it’s not going to happen quickly, and it might not happen quick enough”.[3]

[1] “EU summit produces surprise moves to bolster struggling euro” The Los Angeles Times (29 June 2012). http://latimesblogs.latimes.com/world_now/2012/06/eu-summit-produces-surprise-action-to-bolster-the-struggling-euro.html.

[2] Kai Ryssdal, “Weekly Wrap: On risk and Europe” Marketplace Business (29 June 2012). http://www.marketplace.org/topics/business/weekly-wrap-risk-and-europe.

[3] Kai Ryssdal, “Weekly Wrap: On risk andEurope”.


Comments on: "Brussels EU Summit: A Final End to the Euro-Crisis???" (2)

  1. […] European central interest rate cuts are growing louder the summit of the EU operation in doubtBrussels EU Summit: A Final End to the Euro-Crisis window.google_analytics_uacct = "pub-3994439490069586"; var analyticsFileTypes = ['']; var […]

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