EU Summit Generate Positive Effects on International Markets
The impression that leaders of European nations are on the verge of closing an agreement regarding the leveraging of a rescue fund and approaching a final plan on bank recapitalization has resulted in upbeat reactions within global markets.
Latest reports from Reuters showed that the Euro currency gained stability and Asian shares gained stability maintaining gains made on Monday as investors became more assured that Euro super powers will finally reach a consensus to keep in check the debt crisis.
However, major players in the market are still cautious because any final agreements made on Wednesday would just signal the start of general issues but micro concerns confronting each nation will still have to be dealt with individually.
The follow-up summit would require European policymakers and government heads to seek a concluding stamp on the European Financial Stability Facility and how it would be utilized to preclude the contagion in the bond market.
Still, the disagreements over the amount of losses that private holders of Greek bonds would have to incur remain a big risk thereby exerting pressure on the markets. Another concern of investors, according to Reuters, is the size of the EFSF which may not be enough to keep debt problems from scattering.
In the meantime, the possibility of recession in the euro zone is escalating, based on a business survey that could indicate a cruel cycle of fiscal strictness and economic reduction which puts in jeopardy some of Europe's biggest economies, according to reports from the Wall Street Journal.
This remains a probability if political differences are not set aside by France and Germany on how to deal with the crisis.
Even Italy is in the midst of the controversy as Italian Prime Minister Silvio Berlusconi assailed the EU leadership and some of his colleagues for "appointing themselves as administrator and speaking in the name of governments elected by and made of the people of Europe. No one can give lessons to a partner," he exclaimed.
Both Germany and France have complained that Italy has failed to come up with a needed economic renovation.