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Europe Friday: Over promise, Under Deliver Again?

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The ECB disappointed today, and the EU will probably under deliver again tomorrow.

The following is no surprise – no one expected all 27 countries to agree, just the 17 eurozone countries plus a few more …

From CNBC: EU Fails to Agree on Treaty Change Among 27 States: Diplomats

The European Union failed to secure backing from all 27 countries to change the EU treaty at a summit on Friday, meaning any deal will now likely involve the 17 euro zone countries plus any others that want to join, three EU diplomats said.

From the NY Times: After Rate Cut, Gloom as Europe Leaders Meet

Late Thursday, European leaders here were circulating the draft of a new “fiscal compact” for the currency union, including tighter control of public finances. Disagreement persisted about whether any deal would cover all 27 European Union member states or just the 17-member euro zone, and about whether it would involve amendments to the euro treaty. Leaders were also discussing whether a permanent bailout fund, set to begin operation as early as July, should function as a licensed banker.

Earlier in the day in Washington, President Obama voiced frustration that Chancellor Angela Merkel of Germany and other European leaders were focusing on the wrong problem by negotiating long-term changes to the euro treaty, rather than reassuring the markets and staving off a recession by taking bold short-term action.

Adding to the anxiety, European regulators said on Thursday that many of the region’s biggest banks, including the German giants Deutsche Bank and Commerzbank, needed to raise more money as reserves against potential losses.

The amounts to be set aside are much higher than regulators had estimated as recently as October, and the inclusion of German banks in the roundup was a reminder that even the region’s richest nation was not immune from the debt crisis contagion.

President Nicolas Sarkozy of France, in Marseille on Thursday before heading here, said, “If we don’t have an agreement Friday, there won’t be a second chance.

I’m sure there will be some sort of agreement, but it appears they will under deliver once again.

The Asian markets are all red tonight. The Nikkei is down about 1%, the Hang Seng is off 2.6%.

From CNBC: Pre-Market Data and Bloomberg futures: the S&P 500 futures are up slightly and the Dow futures are up 25.




Calculated Risk

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