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European Debt Crisis

Tim Geithner heads to Germany to push for change

Stephen Beard Jul 30, 2012
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Jeff Horwich: Over the weekend comments by the leaders of Germany and Italy fueled optimism in Europe. They were backing up the head of the European Central Bank, who promised to do “whatever it takes” to keep the European debt crisis from spinning out of control. U.S. Treasury Secretary Tim Geithner is in Europe today. He’s got meetings with Mario Draghi, the ECB president, and Germany’s finance minister.

Marketplace’s London Bureau Chief Stephen Beard is with me live from London. Hello, Stephen.

Stephen Beard: Hello Jeff.

Horwich: What’s Geithner pushing for today?

Beard: Well, he wants the European Central Bank to deliver on its promise; to do what it takes to save the euro — most probably by pumping money into the market on a gigantic scale. Geithner could apply a bit of pressure through the International Monetary Fund. The fund has played a key role in combating the crisis. The U.S. could threaten to veto that role, and that would certainly get the attention of the Europeans.

Horwich: There is plenty of optimism in Europe today — but we’ve had optimism before. Is this time any different?

Beard:Well, investors seem more optimistic. But as you say, there are plenty of skeptics who say: We’ve heard all this talk before about doing what it takes to save the euro.

Sony Kapoor of the European think-tank called Re-Define says what it will take will be very unpopular — especially with the German taxpayers.

Sony Kapoor: The measures needed to restore full confidence in Spain and Italy require a commitment of financial resources that is so large that the political appetite for that does not exist.

We’ll probably have to wait until Geithner’s gone home to see whether this is a turning point. All eyes will be on the European Central Bank at its regular meeting on Thursday to see if it does wheel out the big bazooka.

Horwich: Stephen Beard in London, thanks very much.

Beard: OK Jeff.

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