G-20 to EU: You've got 8 days to fix your mess

Rick Moran
Perhaps this is the only way to get the EU to focus on the crisis.

Reuters:

The world's leading economies pressed Europe on Saturday to act decisively within eight days to resolve the euro zone's sovereign debt crisis which is endangering the world economy.

In unusually direct language, finance ministers and central bankers of the Group of 20 major economies said they expected an October 23 European Union summit to "decisively address the current challenges through a comprehensive plan".

French Finance Minister Francois Baroin, who chaired the meeting, said Berlin and Paris, the leading euro zone powers, were well on the way to agreeing a plan to reduce Greece's debt, stop contagion and protect Europe's banks.

Non-euro countries highlighted the damage the European crisis was already doing to their economies and underlined the urgent need for action by the 17-nation single currency area.

"Europe needs to get its act together because unless the crisis is put to an end, it will start to affect emerging economies which have enjoyed strong growth," Japanese Finance Minister Jun Azumi said.

His Canadian counterpart, Jim Flaherty, said the risk of a global recession would be dramatically higher if next Sunday's European summit failed to deliver.

There's an outline of a deal out there - it's only lacking the political will by Germany, France, and the European Central Bank to pull the trigger.

Details would have to be hashed out, but there is general agreement that the at-risk nations should be divided between those with a debt problem (Greece and Portugal) and those with a liquidity problem (Italy and Spain). Also, big banks would have to be recapitalized, and the ability of the EFSF - the bail out fund - to address the crisis would have to be enlarged.

But hashing out the specifics in 8 days? Good luck with that. France refuses to admit its big banks are failing while Germany is extremely leery of contributing more to the bail out fund.

This is a recipe for "muddling through" - something the euro zone has become quite adept at doing. Not solving the crisis, just kicking the can down the road a few months, hoping a solution presents itself.


Perhaps this is the only way to get the EU to focus on the crisis.

Reuters:

The world's leading economies pressed Europe on Saturday to act decisively within eight days to resolve the euro zone's sovereign debt crisis which is endangering the world economy.

In unusually direct language, finance ministers and central bankers of the Group of 20 major economies said they expected an October 23 European Union summit to "decisively address the current challenges through a comprehensive plan".

French Finance Minister Francois Baroin, who chaired the meeting, said Berlin and Paris, the leading euro zone powers, were well on the way to agreeing a plan to reduce Greece's debt, stop contagion and protect Europe's banks.

Non-euro countries highlighted the damage the European crisis was already doing to their economies and underlined the urgent need for action by the 17-nation single currency area.

"Europe needs to get its act together because unless the crisis is put to an end, it will start to affect emerging economies which have enjoyed strong growth," Japanese Finance Minister Jun Azumi said.

His Canadian counterpart, Jim Flaherty, said the risk of a global recession would be dramatically higher if next Sunday's European summit failed to deliver.

There's an outline of a deal out there - it's only lacking the political will by Germany, France, and the European Central Bank to pull the trigger.

Details would have to be hashed out, but there is general agreement that the at-risk nations should be divided between those with a debt problem (Greece and Portugal) and those with a liquidity problem (Italy and Spain). Also, big banks would have to be recapitalized, and the ability of the EFSF - the bail out fund - to address the crisis would have to be enlarged.

But hashing out the specifics in 8 days? Good luck with that. France refuses to admit its big banks are failing while Germany is extremely leery of contributing more to the bail out fund.

This is a recipe for "muddling through" - something the euro zone has become quite adept at doing. Not solving the crisis, just kicking the can down the road a few months, hoping a solution presents itself.