There's just too much indecision, too much debates, too much dilly dally and poor leadership that's causing a havoc in the Greek crisis. What takes them so long to firm up the details of the aid package when they started discussing since Jan? Even when EU and IMF agreed to support Greece with a 110 billion Euro aid package on last Monday, the Euro and market continued to slide and jilted markets globally. Looks like the investors just do not have confidence in their willpower and execution to see through the aid package. Stop wasting time and just do it. Lousy leadership.
Excerpts from Bloomberg. Looks like the EU is rushing to contain the crisis that they've created. Should have done it earlier.
By James G. Neuger and Gregory Viscusi
May 9 (Bloomberg) -- European Union finance ministers meet today to hammer out the details of an emergency fund to prevent a sovereign debt crisis from shattering confidence in the 11- year-old euro.Jolted into action by last week’s slide in the currency to the lowest in 14 months and soaring bond yields in Portugal and Spain, leaders of the 16 euro nations agreed to the financial backstop at a May 7 summit.
They assigned finance chiefs to get it ready before Asian markets open later today European time.“We will defend the euro, whatever it takes,” European Commission PresidentJose Barroso told reporters in the early hours yesterday after the leaders met in Brussels.Europe’s failure to contain Greece’s fiscal crisis triggered a 4.3 percent drop in the euro last week, the biggest weekly decline since October 2008.
It prompted the U.S. and Asia to urge broader steps to prevent a global sovereign-debt crisis from pitching the world back into a recession.“Europe is getting its act together,” said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. “Time will tell if this statement is enough to satisfy the European bond market vigilantes.”European officials declined to disclose the size of the stabilization fund, to be made up of money borrowed by the EU’s central authorities with guarantees by national governments. Finance ministers will meet at about 3 p.m. in Brussels. A press briefing is scheduled for 6 p.m.
When the markets re-open Monday, we will have in place a mechanism to defend the euro,” French President Nicolas Sarkozy said. “If you don’t think that’s significant, you haven’t been to many EU summits.” Sarkozy cancelled a planned trip to Moscow today to deal with the crisis.Barroso said he wouldn’t push the independent European Central Bank to, for example, buy government bonds. ECB President Jean-Claude Trichetaccelerated the market selloff on May 6 by rejecting that measure.
With the euro facing its stiffest test since its debut in 1999, the summit -- called to discuss efforts to coordinate economic policies -- turned into a crisis-management session that dragged past midnight.The euro slid to $1.2715 from $1.3293 during the week, and is down 15 percent since late November. European stocks sank the most in 18 months, with the Stoxx Europe 600 Index tumbling 8.8 percent to 237.18.
The extra yield that investors demand to hold Greek, Portuguese and Spanish debt instead of benchmark German bonds rose to euro-era highs. The premium on 10-year government bonds jumped as high as 973 basis points for Greece, 354 basis points for Portugal and 173 basis points for Spain.Europe came under pressure on a hastily arranged conference call of Group of Seven finance chiefs before the summit.
All agreed on “the need for a clear, timely and strong response,” Canadian Finance Minister Jim Flaherty, who chaired the call, told reporters in Ottawa. “We hope to see a strong, early policy response in Europe.”The spreading contagion also drew the attention of President Barack Obama, who said in Washington that U.S. regulators will examine the “unusual market activity” that on May 6 briefly drove the Dow Jones Industrial Average down by almost 1,000 points, erasing more than $1 trillion in wealth before the market bounced back.“There are impacts on financial markets, including share markets, from the events in Europe and in Greece more specifically,” Australian Treasurer Wayne Swan told reporters in Canberra. “We are urging as speedy a resolution as is possible in the circumstances.”
In Brussels, German Chancellor Angela Merkel stepped up German calls for a closer monitoring of government finances and more rigorous enforcement of the deficit-limitation rules, originally drafted by Germany in the 1990s.Europe will send “a very clear signal against those who want to speculate against the euro,” Merkel said.With the euro region’s overall deficit forecast at 6.6 percent of gross domestic product in 2010 and 6.1 percent in 2011, the vow to bring budget shortfalls back below the euro’s 3 percent limit echoes promises that have been regularly broken ever since governments in 1999 set a three-year deadline for achieving balanced budgets.Plans for a European credit-rating authority are already under consideration at the EU Commission, the bloc’s Brussels- based executive agency.
It also is investigating whether ratings companies such as Standard & Poor’s wield too much power over investors’ perceptions of governments. Asked whether steps to stem speculation against government bonds would include restrictions on short sales or credit default swaps, Barroso said “some of the points you have mentioned will be contemplated.”The political leadership of the $12 trillion economy also signed off on a 110 billion-euro ($140 billion) aid package for Greece negotiated by finance ministers last week. So far nine governments have cleared the way for funds to be sent to Athens.
Germany, the biggest contributor with as much as 22.4 billion euros over three years, fell in line with endorsements in the lower and upper houses of parliament on May 7. A group of German academics filed a lawsuit to try to halt the payout. Germany’s highest court yesterday rejected the challenge.A day after whisking a three-year, 30 billion-euro program of deficit cuts through parliament, Greek Prime Minister George Papandreou ruled out further belt-tightening steps for the time being, saying the point of the summit was to “reaffirm our confidence in our economies and our common currency and this I believe is a very important message for the global economic recovery.”