The soap opera that is the Eurozone debt crisis (we think it should be called either Die Nasty or Defaultnation Street, both in honour of the Greeks) produced two new episodes over the weekend.
The meeting between the small but beautifully formed President Sarkozy and the neither of the above Chancellor Merkel produced a tantalising and teasing ending.
They said “Yes they will just not yet.”
They will recapitalise the banks, they will have a fully formed plan in place by the end of October.
It is always interesting to watch President Sarkozy “peacock” upon the European stage, it may be that he is the poodle (or should that be Shih-Tzu) of the Germans but he doesn’t seem to care.
He doesn’t seem to care either about the epic about-face he recently performed when firstly arguing passionately for the EFSF to be radically increased, only for it to be pointed out to him that by doing so France would lose its Triple A credit rating, and he no longer thinks this is the best option for Europe (important to note “for Europe”).
Episode two – Dave’s big bazooka
As humorous as the headlines have been the point David Cameron was making is smack on the money (quite literally).
Recently the Swiss Central Bank intervened to halt the rise of their currency.
They stated that they would do whatever was needed, “WITHOUT LIMIT”, to halt further appreciation.
Since this announcement the markets have left the Swiss alone. The Swiss Bank have had to actually do very little, the vital point was what they said they would do.
European leaders have to do the same. They should say they will do what is needed “WITHOUT LIMIT”.
The markets have taken heart from the “Sarkel show” and those that purport “to know” are saying that last Monday was the market’s capitulation moment and a bottom was reached.
It is hard to believe that there will be no further bumps in the road, at least one Euro minor will in all likelihood vote “NO” to the EFSF (it’s sobering to think that Malta, population 400,000 size 316 km2, can veto the proposal).
It is clearly the case however that there is now movement to fashion solutions to the issues and that the Euro big (or not in the case of le President) boys are getting les canards in a row.
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