European bailout fund has little force left
French President Nicolas Sarkozy greets Italian Prime Minister Mario Monti prior to a meeting with German Chancellor Angela Merkel on November 24, 2011 in Strasbourg, France.
Jeremy Hobson: The news from Europe this morning starts with Italy, which had to pay a euro-era record rate to borrow money from the bond market. Meanwhile, another European Union country was downgraded to junk status by Moody's -- that would be Hungary. To tackle all this, European finance ministers want to beef up the bailout fund.
As Marketplace's Stephen Beard reports from London.
Stephen Beard: The bailout fund was once called the "big bazooka" a mighty weapon in Europe's armory that would zap the debt crisis. The fund was supposed to lend to any eurozone government in trouble. But the bazooka now looks more like a BB gun -- after lending heavily to the Greeks, the Portuguese and the Irish, it only has about $350 billion left. Italy and Spain will soon need more than double that between them.
And Raoul Ruparel of the Open Europe think-tank says a plan to persuade China and others to put money into the fund has come to nothing.
Raoul Ruparel: It's really not clear to countries such as China or sovereign wealth funds around the world what they would be investing in. So you can understand the hesitancy to contribute or commit any sizeable funds at the moment.
He says Chinese reluctance is hardly surprising, since Germany -- the eurozone's economic superpower -- seems loathe to back up the zone with much more of its own cash.
In London, I'm Stephen Beard for Marketplace.