It is Wednesday morning, the markets have not opened in Europe as of yet. Asian markets have climbed this morning after a report that more rescue funding
It is Wednesday morning, the markets have not opened in Europe as of yet. Asian markets have climbed this morning after a report that more rescue funding may be available to help the eurozone.
The markets are totally reactionary, responding to every bit of news. Investors aren’t looking at charts and graphs, they are not using technical analyst to trade this week. It is purely fundamental.
News, Reports, Events, and Statements. Everything is tied to Brussels.
If you notice the peaks and troughs in the chart they are tied directly to news releases, statements and reports released in regards to the European Debt Crisis. Last Fridays US report that showed Unemployment dropping to 8.6% barely made a blimp on the markets.
BBC is reporting that a leaked report for a crucial EU summit beginning on Thursday that European Council President Herman Van Rompuy says that “Tougher rules to tackle the eurozone debt crisis can be achieved without changing EU treaties”, he offers a fast-track “fiscal compact” that does not need lengthy ratification by parliaments or national referendums.
France and Germany are pushing for a new EU treaty by March, saying stricter rules should be added.
It seems that the EU and the European Council are on different tracks.
Three crucial days for the euro as the countdown continues
The credibility of the single the currency of 17 European countries -is at stake. There have been plenty of “quickie” EU summits in the past two years aimed at tackling the debt crisis spreading through Europe. The crisis has deepened, threatening to turn economic troubles into a full blown recession.
Germany’s Merkel believes the only way to prevent a crisis happening again is to build the budget rules in EU treaties. There would then be a mechanism in primary EU law to impose penalties on countries that go beyond agreed deficit limits. Will these member states accept punishment?
Chancellor Merkel wants other eurozone countries to duplicate Germany’s budget discipline, so that their borrowing is kept under control. France’s President Nicolas Sarkozy is now agreeing with her, but there is no agreement yet on the details of treaty change. There are too many stumbling stones to get past in time to save the euro.
Perhaps the Council plans is more efficient, as the EU needs a response now, not debate.
In the leaked report, details of which have been obtained by the media, Mr. Van Rompuy proposes a plan called “new fiscal compact” without holding a referendum or ratification by the parliaments of each eurozone country. The report says that tougher fiscal reforms can be adopted simply by amending a protocol “a procedure that needs national consensus but does not require substantial changes to the EU treaties.”
This, Mr. Van Rompuy argues, would speed up the implementation of reforms and remove any potential political complications. Here we have two opposing views. What will happen over the next few days?