TradingFloor.com Releases New Video Commenting On Eurozone
Released on: September 30, 2011, 3:28 pm
Author: Saxo Bank
TradingFloor.com has released a new video featuring Steen
Jakobsen, chief economist at Saxo Bank, warning that solutions to the
Eurozone debt problems need to be found before the Cannes G-20 Summit
The new video highlights the sense of urgency for a solution to Eurozone problems, which has
increased with market reaction clearly indicating intolerance with the current pace
of progress, especially of late concerning the ratification of the 21 July changes
to the European Financial Stability Facility and a solution for Greece.
Jakobsen mentions that there are some significant steps to take these days like key
Eurozone member votes on EFSF ratification. Despite previously strong opposition to
further rescue measures for troubled Eurozone members, anything but ratification is
unlikely, says Steen. The Slovenian and German parliament has already given its
thumbs up with Finland and Austria expected to follow suit by the end of the week.
Though once approved by all member states this supposed knight in shining armour
will not be able to ride easily to the rescue of failing nations. Unanimous (not
majority) votes are required for decisions - like expansions of the facility - to be
Meanwhile, talk about the concept of a European Investment Bank leveraging on the
EFSF to ring-fence European banks from any fallout from the EU debt crisis, is
hardly seen as a band aid but rather a ploy which will hardly solve anything,
according to Steen.
Steen likens Greece's attempts at new austerity packages as an attempt to save the
troubled nation at the goal line. With 99 per cent probability of default then talk
of saving Greece is actually quite comical, he says. Meanwhile, austerity fatigue is
apparent as evidenced by more strikes across Athens. Ultimately Greece needs debt
forgiveness and a clean slate but a free-ticket to safety would hardly go down well
with other troubled Eurozone nations. Nevertheless, Greece has become kind of a
scapegoat due to increased talk of contagion (which is not an economic concept but
rather a policymakers' excuse for not doing what needs to be done domestically).
Contagion or not, it doesn't change the fact that there is no way out for Greece
other than default, concluded Steen.
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