Will the summit find a solution to the debt on Saturday and Sunday?

Inviato il 22 October 2011 da Forex Staff

We know that there is a great crisis in the euro zone that keeps the markets stalled. Saturday and Sunday  the leaders of the areas will meet in an attempt to find a permanent solution, but hardly something like that will happen. If things go as saod, therefore no solution found, this may not do anything but further undermine the confidence of financial markets, already shattered, towards the euro area and from its ability to cope with the crisis debt that now lasts two years and that threatens the long-term viability of the single currency.

The Financial Times opens another fundamental question, that of predicting the strengthening of the banking system. The latest official estimate said 100 billions should be enough to helpthe banks in deficit, while the Financial Times said it needed 200 billion euros, the latest estimates of analysts want 275 billions intstead.

A senior of the European Union, which deals with finding the solution to the crisis, said that the only switch capable of temporarily turn off this crisisis that the ECB should engage in the purchase of debt securities of euro area for as long as is necessary, something that Trichet has said that should not happen.

However, Barroso said that the decisive intervention of the ECB on the secondary bond market was and still is a critical element to ensure financial stability in the euro area. Uncertainty about the future of the euro area has increased a few days ago after Moody’s issued a downgrade of the rating twice in Spain, the day after the agency has warned France that its triple-A could be put under pressure.

It is therefore hoped that in the meeting this weekend, starting tomorrow, the politicians fail to reach agreements to the solution of the crisis.