European leaders could be reaching impasse over debt solution
French President Nicolas Sarkozy and German Chancellor Angela Merkel speak to the media following talks on Oct. 9, 2011 in Berlin, Germany.
Jeremy Hobson: We're just a few days away from the deadline European leaders have set to come up with a grand solution to the debt crisis. In Athens today, the Greek parliament will take final votes on a package of budget cuts needed for Greece to get more bailout money -- those votes are expected to be close.
But perhaps more concerning is news that German Chancellor Angela Merkel and French President Nicolas Sarkozy may have reached an impasse on the subject of how to use the big euro rescue fund.
For more we go to reporter Christopher Werth, who is live for us in London. Good morning.
Christopher Werth: Hey, good morning.
Hobson: So tell us what this disagreement is about.
Werth: Well, they're divided over how to magnify the power of the fund. It's worth about $600 billion now, and that's not going to be enough to solve any of the problems facing the eurozone. Some analysts say it's going to take several trillion dollars.
And so, to increase that firepower, the French want to do that by borrowing money from the European Central Bank. Germany doesn't like that plan at all.
Hobson: Well, then I guess maybe this is the time to ask: what happens if they can't agree on a credible plan by the deadline, Sunday?
Werth: I think it's safe to say that the response won't be good.
I spoke with Andrew Hilton at the CSFI think-tank here in London. He said European leaders are now trying to lower expectations ahead of this Sunday deadline.
Andrew Hilton: A couple of weeks ago this was the key date. Everything was going to be resolved on Sunday. This was the big meeting. And after that we could all go off into a sunlit future. And now I think the markets are much more skeptical.
And you know, Jeremy, I think a lot of the attention has been focused on Greece over the past couple of days. But the wider risk is if they don't increase the power of the fund, is that it won't be big enough to deal with much bigger economies, like Italy and Spain.
Hobson: Reporter Christopher Werth joining us from London this morning. Thanks, Chris.
Werth: Hey, thanks Jeremy.