Does the expression "throwing good money after bad" mean anything in Europe anymore?
There are interesting splits in Europe, compliments of a massive international effort to display cohesiveness and unity. Compliments of the eurozone, there are those in the 17-member currency region and those left out. Compliments of inequities within the eurozone, the prosperous northern countries are aligned sometimes for and sometimes against the struggling southern countries of Greece, Spain, Italy and Portugal. And then there is the split that aligns Germany and France against the rest of the region, not to mention the fission between Germany and France.
Leaders in Germany and France understand that nothing moves forward without an agreement between them -- hence, a seemingly endless string of meetings between President Nicolas Sarkozy and Chancellor Angela Merkel in advance of regional summits.
That means there are divisions within the divisions. Germany, at this point, favors creditors holding Greek debt accept deeper losses than French banks want to take. How much of an effort to recapitalize banks
in Europe and how much aid goes to Greece itself is a second bone of contention.
"We are determined to do what is necessary to guarantee the recapitalization of our banks," Merkel said after a meeting in Berlin Sunday. "We will make proposals in a comprehensive package that will enable closer cooperation between eurozone countries."
In short order, Merkel is saying there is no agreement just yet between France and Germany. Secondly, France and Germany are committed to finding a compromise.
With nerves as jittery as they are, investors are steering headline to headline and quote to quote.
But investors can still scan the horizon quicker than 17 national leaders can react to any issue and they are concerned that, beyond Greece, there is trouble in Spain and Italy and, at the same time, data shows Greece needs more money than was previously expected.
An expanded structure to the $600 billion European Financial Stability Facility is making its way from parliament to parliament finding approval across the eurozone with several countries left to vote on the matter.
Provided the July changes to the EFSF find approval in 17 parliaments, it is clear that new measures are needed before the ink even dries on the expanded parameters of the rescue fund. Greece is already in voluntary default, as it is. France and Germany are discussing the depth of losses -- in Wall Street vernacular, haircuts -- without allowing the word default cross their lips anymore than is humanly possible. With studied aplomb, one could easily say: "Yeah. Good luck with that."
In international markets on Columbus Day, the Nikkei 225 index in Japan rose 0.98 percent and the Shanghai composite index in China fell 0.61 percent. The Hang Seng index in Hong Kong rose marginally, up 0.02 percent and the Sensex in India rose 2 percent.
In Australia, the S&P/ASX 200 rose 0.92 percent.
In midday trading in Europe, the FTSE 100 index in Britain added 0.76 percent while the DAX 30 in Germany gained 0.34 percent. The CAC 40 in France climbed 0.65 percent and the Stoxx Europe 600 index added 0.36 percent.
|Additional Analysis: Economic Outlook Stories|
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