Angela Merkel and Nicolas Sarkozy, racing to stamp out the euro debt crisis threatening to engulf the financial system, gave themselves three weeks to devise a plan to recapitalize banks, get Greece on the right track and fix Europe’s economic governance.
In almost 2 years of achieving zilch except exponentially inflating the taxpayers of Europe's exposure to sovereign default and bad debt. In three weeks they are to devise a plan:
- to recapitalize banks,
- get Greece on the right track, and
- fix Europe’s economic governance.
“By the end of the month, we will have responded to the crisis issue and to the vision issue,” the French president said in Berlin yesterday at a joint briefing with the German chancellor before they dined at her office.
What did they eat, a Dutch Hash Cake?
Under rising pressure to defuse turmoil that’s raged for 18 months, and facing growing concern Greece is headed to a default, Merkel said European leaders will do “everything necessary” to ensure that banks have enough capital. Sarkozy said they would deliver a plan by the Nov. 3 Group of 20 summit.
I can't wait.
While the heads of Europe’s two biggest economies reiterated their intention to keep Greece in the euro, they left it to international auditors, known as the “troika,” to guide the next steps. Sarkozy didn’t repeat the line he used 10 days ago that “we can’t let Greece fail.”
Back to buying Ouzo in Drachmas.
Underscoring the urgency, the board of French-Belgian Dexia met yesterday to begin dismantling the lender, the first victim of the debt crisis at the core of Europe. Belgium's government announced early today it would pay 4 billion euros ($5.4 billion) to take over the local consumer-lending unit as part of the process.
Only 5.4Billion for Dexia, which has global credit risk exposure of $700 billion? Betcha the Belgian taxpayer is happy considering their GDP is only $470 billion.
After their eighth bilateral summit in 20 months, the two leaders unveiled no new agreement on what role should be played by the bailout fund, the European Financial Stability Facility, amid reports that they differed on how to use it.
“We will recapitalize the banks,” Sarkozy said. “We’ll do it in complete agreement with our German friends because the economy needs it, to assure growth and financing.”
French and German friendship. How sweet. Friends to the core throughout history.