http://www.dailymail.co.uk/news/article-2041201/George-Osbornes-eurozone-crisis-warning-6-weeks-save-euro.html
Six weeks to save the euro
September 25th, 2011 05:20 pm · Posted in NEWS (Iraq & World Currency)
Six weeks to save the euro: Chancellor’s warning
after another day of financial turmoil
leaders were warned last night
that they have just six weeks to save the euro from collapse.
On
another day of gathering economic gloom, George Osborne savaged eurozone leaders
for failing to get a grip on their towering debts.
The Chancellor set
a deadline of six weeks – when leaders of the G20 group of leading countries
will meet for crunch talks in France – for action.
He said:
‘Patience is running out in the international community. There is a sense from
across the leading lights of the eurozone that time is running out for them.
‘The eurozone has six weeks to resolve this political
crisis.’
Mr Osborne also signalled dramatic plans to prop up Britain’s
faltering economy, opening the door for a rescue plan that would see the Bank
of England lend directly to struggling small businesses.
In other
developments:
IMF chief Christine Lagarde said the challenge facing
the world ‘could not be more urgent’;
World markets remained dangerously
volatile, with Britain’s leading firms seeing £78billion wiped off their value
this week;
The G20 insisted it would take necessary steps to try to stop the
eurozone crisis spreading;
Debt-laden Greece admitted for the first time
that an ‘orderly default’ was an option;
Economists at the Royal Bank of
Scotland predicted that Europe is falling back into recession.
There is a
growing expectation in Whitehall that the Bank of England will authorise another
emergency injection of cash into the economy with a second round of
‘quantitative easing’ – essentially, printing money.
As much as
£300billion is expected to be flooded into the economy despite the risk that it
will push inflation still higher, increasing the cost of living.
The
Bank has already poured £200billion into the economy to try to bolster growth,
but there have been renewed calls for another dose of the
medicine.
Mr Osborne, in Washington, signalled that he is open to the
idea of the Bank ring-fencing some of the cash for direct loans to small or
medium-sized firms that are in urgent need of help to expand or simply keep
afloat.
Warning: Chancellor George Osborne has raised the
possibility of the Bank of England lending to small
businesses
The move would be a victory for the Daily
Mail’s Make the Banks Lend Campaign, which has highlighted the banks’ refusal to
provide credit to small businesses and demanded action to help the lifeblood of
the British economy.
The Chancellor said it was ‘bad politics’ that
was leading to ‘bad economics’ in the EU, insisting the continent must implement
a package of measures agreed in July to provide bailouts for foundering
countries in the single currency.
More…
Cameron joins world
leaders in open letter to Sarkozy warning of economy at ‘pre-crisis levels’ and
attacking US and Europe
An eight-hour day? Not for us, say EU pen pushers
Edgy markets fall then rise, after G20 pledges support and Cameron warns of
economic disaster
Meltdown month: Wall St Crash, Black Wednesday, collapse
of Lehman Brothers… all were hit in September. So is history about to repeat
itself?
Balls ‘sexed up Treasury forecasts to inflate public spending beyond
sensible levels,’ say ex-colleagues
The Chancellor wants a £350billion
European Financial Stability Facility, which provides bailouts for countries at
risk of defaulting on their debts and sending shockwaves through the world’s
banking system, to be beefed up. ‘I am not sure it is adequate,’ he
said.
Britain is also pushing the euro countries to move quickly to
ensure banks in the danger zone have more capital, to ensure they can withstand
market pressures.
Mr Osborne refused to be drawn on whether Greece
would be forced into a debt default and a potential exit from the single
currency, but revealed that Britain has contingency plans to cope with such an
outcome.
IMF chief Christine Lagarde said the challenge facing
the world ‘could not be more urgent’
‘I have made it a priority for the
Financial Services Authority and the Bank of England to make sure that the UK
banking system is adequately capitalised and has sufficient liquidity to deal
with all eventualities,’ he said.
He admitted that the growing
international economic crisis would hit Britain, but flatly rejected calls to
soften his deficit reduction plan.
‘The UK is taking appropriate
action,’ he said. ‘It is very clear what has got to happen. We are sticking to
the plan. We have got ahead of the curve and have
credibility.’
Michael Saunders, an economist at CitiBank, said he had
halved growth forecasts for Britain to 1 per cent this year and just 0.7 per
cent next year.
He said he expected unemployment to rise from 7.9 per
cent to 9 per cent, which would bring the total close to the 3million who were
out of work in the 1980s.
Mme Lagarde warned again of ‘downside
risks on the horizon’ for the global economy and said developing economies must
play a part in propping it up.
The IMF boss said: ‘There is growth.
The bad news is that it is slow growth. There are downside risks on the horizon,
and they are piling up. Negative feedback loop between weak growth, weak banks,
and what is very much perceived as weak political commitment. This has led to a
crisis of confidence.’
Echoing Mr Osborne’s refrain about the need
for deficit reduction in Britain, she added: ‘We are all in this together. There
are dark clouds over Europe and huge uncertainty in the U.S., and with that we
could see collapse in global demand.’
The FTSE 100 Index lost 5.6 per
cent or £78billion from its value this week, the second worst weekly fall this
year, despite a last-minute push which saw it close 0.5 per cent higher on the
day yesterday.
America has lost patience with Europe
BY ALEX
BRUMMER
The veteran U.S. monetary official did not mince his words in a
private conversation over dinner. ‘America is very, very angry over what has
been going on in the eurozone.’
As the markets went into freefall over
the last few days, the deterioration in relations between the U.S. and the
countries of the single currency has become frightening.
The Americans
believe that if the world were to tumble back into recession or a prolonged
depression, as looks increasingly likely, it would be the euro area to blame.
Sell, sell, sell! Panic on Wall Street this week
All the
hard work done in the U.S., Britain and other countries in the wake of the
Lehman Brothers collapse three years ago – including the regime of record low
interest rates and pumping hundreds of billions of taxpayer pounds into the
banks and the economy – will have been wasted.
George Osborne has made
clear that he believes the euro is in the last-chance saloon. The crisis which
began in Greece in early 2010 has been allowed to fester for too long.
What is plain is that at an overnight emergency session of the G20
advanced and leading emerging markets economies here in Washington, the euroland
leaders were read the riot act.
Up and down: The Dow Jones has
fluctuated by more than 6,000 points since President Obama took office in
January 2009, hitting a low of 6,547 in the spring season of his first year and
a high of 12,811 earlier in 2011
They were made to recognise that the
falls in share markets around the world, which have impoverished tens of
millions of savers and pensioners, are fed by fear for future global prosperity
and are not the result of some Anglo-Saxon plot to bring down the single
currency.
The reality is that months of appalling indecision, driven by
some of the mini-countries within the monetary union, had in fact underlined the
need for Germany and France to seize the political opportunity to bring the
crisis to an end.
The final deadline set by the G20 for sorting out the mess is the Cannes G20 summit on the first weekend of November. That, if all goes well, should see the formal launch of the European Financial Stability Facility (of which Britain is not a part), a bailout fund that is capable of rescuing Greece.
Up and down: The Dow Jones industrial average
finished up 38 points, or 0.4 percent, at 10,771 today
Enlarge
Down: This graph shows how the Dow Jones industrial average has fluctuated
over the past week
That may all seem hunky-dory. But in the world of
fast-moving, testosterone- and panic-fuelled financial markets, it looks a
lifetime away. If shares were to continue to fall at the mad pace of the last
few days – wiping out great chunks of the capital of Britain’s major companies –
then all bets would be off.
The big lesson of the Great Depression of
the 1930s is that governments and central banks around the world were too slow
to act.
Euro leaders claim they are victims of Parliamentary timetables
which have meant long delays in getting the bail-out fund up and running.
But investment managers, hedge funds, the big global banks and other
market participants have lost faith in the eurozone’s will to act. The eurozone
needs to move to a war footing, by pumping new capital into its banks, and
setting up a rescue fund with the capacity to save Italy or Spain if it became
necessary.
Britain cannot divorce itself from events given that up to 80
per cent of our trade is with euro-area nations.
Without a eurowide
rescue, the prospects of heading off a prolonged slump – which will devastate
every British household and business – will be remote.
Six weeks to save the euro
September 25th, 2011 05:20 pm · Posted in NEWS (Iraq & World Currency)
Six weeks to save the euro: Chancellor’s warning
after another day of financial turmoil
leaders were warned last night
that they have just six weeks to save the euro from collapse.
On
another day of gathering economic gloom, George Osborne savaged eurozone leaders
for failing to get a grip on their towering debts.
The Chancellor set
a deadline of six weeks – when leaders of the G20 group of leading countries
will meet for crunch talks in France – for action.
He said:
‘Patience is running out in the international community. There is a sense from
across the leading lights of the eurozone that time is running out for them.
‘The eurozone has six weeks to resolve this political
crisis.’
Mr Osborne also signalled dramatic plans to prop up Britain’s
faltering economy, opening the door for a rescue plan that would see the Bank
of England lend directly to struggling small businesses.
In other
developments:
IMF chief Christine Lagarde said the challenge facing
the world ‘could not be more urgent’;
World markets remained dangerously
volatile, with Britain’s leading firms seeing £78billion wiped off their value
this week;
The G20 insisted it would take necessary steps to try to stop the
eurozone crisis spreading;
Debt-laden Greece admitted for the first time
that an ‘orderly default’ was an option;
Economists at the Royal Bank of
Scotland predicted that Europe is falling back into recession.
There is a
growing expectation in Whitehall that the Bank of England will authorise another
emergency injection of cash into the economy with a second round of
‘quantitative easing’ – essentially, printing money.
As much as
£300billion is expected to be flooded into the economy despite the risk that it
will push inflation still higher, increasing the cost of living.
The
Bank has already poured £200billion into the economy to try to bolster growth,
but there have been renewed calls for another dose of the
medicine.
Mr Osborne, in Washington, signalled that he is open to the
idea of the Bank ring-fencing some of the cash for direct loans to small or
medium-sized firms that are in urgent need of help to expand or simply keep
afloat.
Warning: Chancellor George Osborne has raised the
possibility of the Bank of England lending to small
businesses
The move would be a victory for the Daily
Mail’s Make the Banks Lend Campaign, which has highlighted the banks’ refusal to
provide credit to small businesses and demanded action to help the lifeblood of
the British economy.
The Chancellor said it was ‘bad politics’ that
was leading to ‘bad economics’ in the EU, insisting the continent must implement
a package of measures agreed in July to provide bailouts for foundering
countries in the single currency.
More…
Cameron joins world
leaders in open letter to Sarkozy warning of economy at ‘pre-crisis levels’ and
attacking US and Europe
An eight-hour day? Not for us, say EU pen pushers
Edgy markets fall then rise, after G20 pledges support and Cameron warns of
economic disaster
Meltdown month: Wall St Crash, Black Wednesday, collapse
of Lehman Brothers… all were hit in September. So is history about to repeat
itself?
Balls ‘sexed up Treasury forecasts to inflate public spending beyond
sensible levels,’ say ex-colleagues
The Chancellor wants a £350billion
European Financial Stability Facility, which provides bailouts for countries at
risk of defaulting on their debts and sending shockwaves through the world’s
banking system, to be beefed up. ‘I am not sure it is adequate,’ he
said.
Britain is also pushing the euro countries to move quickly to
ensure banks in the danger zone have more capital, to ensure they can withstand
market pressures.
Mr Osborne refused to be drawn on whether Greece
would be forced into a debt default and a potential exit from the single
currency, but revealed that Britain has contingency plans to cope with such an
outcome.
IMF chief Christine Lagarde said the challenge facing
the world ‘could not be more urgent’
‘I have made it a priority for the
Financial Services Authority and the Bank of England to make sure that the UK
banking system is adequately capitalised and has sufficient liquidity to deal
with all eventualities,’ he said.
He admitted that the growing
international economic crisis would hit Britain, but flatly rejected calls to
soften his deficit reduction plan.
‘The UK is taking appropriate
action,’ he said. ‘It is very clear what has got to happen. We are sticking to
the plan. We have got ahead of the curve and have
credibility.’
Michael Saunders, an economist at CitiBank, said he had
halved growth forecasts for Britain to 1 per cent this year and just 0.7 per
cent next year.
He said he expected unemployment to rise from 7.9 per
cent to 9 per cent, which would bring the total close to the 3million who were
out of work in the 1980s.
Mme Lagarde warned again of ‘downside
risks on the horizon’ for the global economy and said developing economies must
play a part in propping it up.
The IMF boss said: ‘There is growth.
The bad news is that it is slow growth. There are downside risks on the horizon,
and they are piling up. Negative feedback loop between weak growth, weak banks,
and what is very much perceived as weak political commitment. This has led to a
crisis of confidence.’
Echoing Mr Osborne’s refrain about the need
for deficit reduction in Britain, she added: ‘We are all in this together. There
are dark clouds over Europe and huge uncertainty in the U.S., and with that we
could see collapse in global demand.’
The FTSE 100 Index lost 5.6 per
cent or £78billion from its value this week, the second worst weekly fall this
year, despite a last-minute push which saw it close 0.5 per cent higher on the
day yesterday.
America has lost patience with Europe
BY ALEX
BRUMMER
The veteran U.S. monetary official did not mince his words in a
private conversation over dinner. ‘America is very, very angry over what has
been going on in the eurozone.’
As the markets went into freefall over
the last few days, the deterioration in relations between the U.S. and the
countries of the single currency has become frightening.
The Americans
believe that if the world were to tumble back into recession or a prolonged
depression, as looks increasingly likely, it would be the euro area to blame.
Sell, sell, sell! Panic on Wall Street this week
All the
hard work done in the U.S., Britain and other countries in the wake of the
Lehman Brothers collapse three years ago – including the regime of record low
interest rates and pumping hundreds of billions of taxpayer pounds into the
banks and the economy – will have been wasted.
George Osborne has made
clear that he believes the euro is in the last-chance saloon. The crisis which
began in Greece in early 2010 has been allowed to fester for too long.
What is plain is that at an overnight emergency session of the G20
advanced and leading emerging markets economies here in Washington, the euroland
leaders were read the riot act.
Up and down: The Dow Jones has
fluctuated by more than 6,000 points since President Obama took office in
January 2009, hitting a low of 6,547 in the spring season of his first year and
a high of 12,811 earlier in 2011
They were made to recognise that the
falls in share markets around the world, which have impoverished tens of
millions of savers and pensioners, are fed by fear for future global prosperity
and are not the result of some Anglo-Saxon plot to bring down the single
currency.
The reality is that months of appalling indecision, driven by
some of the mini-countries within the monetary union, had in fact underlined the
need for Germany and France to seize the political opportunity to bring the
crisis to an end.
The final deadline set by the G20 for sorting out the mess is the Cannes G20 summit on the first weekend of November. That, if all goes well, should see the formal launch of the European Financial Stability Facility (of which Britain is not a part), a bailout fund that is capable of rescuing Greece.
Up and down: The Dow Jones industrial average
finished up 38 points, or 0.4 percent, at 10,771 today
Enlarge
Down: This graph shows how the Dow Jones industrial average has fluctuated
over the past week
That may all seem hunky-dory. But in the world of
fast-moving, testosterone- and panic-fuelled financial markets, it looks a
lifetime away. If shares were to continue to fall at the mad pace of the last
few days – wiping out great chunks of the capital of Britain’s major companies –
then all bets would be off.
The big lesson of the Great Depression of
the 1930s is that governments and central banks around the world were too slow
to act.
Euro leaders claim they are victims of Parliamentary timetables
which have meant long delays in getting the bail-out fund up and running.
But investment managers, hedge funds, the big global banks and other
market participants have lost faith in the eurozone’s will to act. The eurozone
needs to move to a war footing, by pumping new capital into its banks, and
setting up a rescue fund with the capacity to save Italy or Spain if it became
necessary.
Britain cannot divorce itself from events given that up to 80
per cent of our trade is with euro-area nations.
Without a eurowide
rescue, the prospects of heading off a prolonged slump – which will devastate
every British household and business – will be remote.