Three big players in euro crisis finally agree
French President Nicolas Sarkozy and German Chancellor Angela Merkel will meet this coming Friday with the hope of making important decisions regarding the future of Europe.
Mitchell Hartman: Now to Europe, where German Chancellor Angela Merkel and other European leaders are outlining a new unified economic policy. That has reassured investors, and driven down the cost of borrowing for Italy and Spain.
Stephen Beard joins me from our London bureau. Good morning, Stephen.
Stephen Beard: Hello, Mitchell.
Hartman: What is this plan that the German chancellor laid out today?
Beard: She addressed the central issue of this crisis -- the fact that some governments in the eurozone have spent more money than they could afford, and as a result have run up unsustainable debts. Mrs. Merkel called for a new, legally binding set of rules to control eurozone government spending; and for stiff penalties for those eurozone governments that break the rules.
Hartman: We've heard similar proposals already, I think quite a few times actually. Why is this one being taken more seriously by banks and also by investors?
Beard: It's the timing. It comes after a similar speech by the French president last night, and a speech yesterday by the head of the European Central Bank. He indicated the bank would pump more money into the eurozone if there was this move towards a closer fiscal union.
Now, this isn't the big bazooka that many investors have demanded. This is the bank printing money on a vast scale. But this is, at least, the three key players in this crisis at least, and at last, all more or less on the same page.
Daniel Gross of the European Center for Policy Studies in Brussels thinks the most acute phase of the crisis has now past, although the crisis certainly isn't over.
Daniel Gross: The rest of the world will have to live with a wobbly eurozone for quite some time, but in the end the eurozone will actually emerge from this stronger than before.
Chancellor Merkel will discuss the planned financial reforms with the French president on Monday, and they'll present the plan at a crucial EU summit one week from today.
Hartman: Thank you very much. Marketplace's Stephen Beard in London.
Beard: OK, Mitchell.