How much of a financial bazooka does Europe need?

A woman walks by a sign showing a euro coin at a bank branch in Athens, on January 31, 2012.

Stacey Vanek Smith: European finance ministers are meeting in Denmark today. They're reportedly adding $670 billion to their bailout fund. Ministers have been trying to figure out how big of a financial bazooka they need to defend Europe from speculators.
From London, Marketplace's Stephen Beard reports.

Stephen Beard: When speculators began attacking the eurozone two years ago, dumping government bonds, the eurozone’s initial response was widely seen as feeble. They lobbed the equivalent of a couple of grenades. But the battle intensified.

The Europeans wheeled out what they called their 'big bazooka' -- a multi-billion dollar bailout fund to buy up the beleaguered bonds and blow the speculators away. Now the fund is running low on ammunition. Ministers are talking about creating a much bigger fund.

Here’s Simon Tilford of the Centre for European Reform.

Simon Tilford: If the eurozone doesn’t do anything else to get the southern eurozone economies growing, they will need a very,very big bazooka indeed.

Perhaps, he says, a bailout fund worth as much as $1.5 trillion. Not so much a bazooka as a ballistic missile.

In London, I’m Stephen Beard for Marketplace.

About the author

Stephen Beard is the London Bureau Chief, providing daily coverage of Europe’s business and economic developments for the entire Marketplace portfolio.


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