A not so secret 17 page paper was discussed by the finance ministers of the EU on Tuesday.
A bail-out of toxic assets held by European Banks could lead to plunge the European Union into a crisis.
There is talk that European banks may be sitting on £16.3 trillion of toxic assets and could suffer massive losses.
There is a business decision to be made as well as a policy decision.
National leaders and EU officials share fears that a second bank bail-out in Europe will raise government borrowing at a time when investors - particularly those who lend money to European governments - have growing doubts over the ability of countries such as Spain, Greece, Portugal, Ireland, Italy and Britain to pay it back.
In line with the risk, and the weak performance of some EU economies compared to others, investors are demanding increasingly higher interest to lend to countries such as Italy instead of Germany. Ministers and officials fear that the process could lead to vicious spiral that threatens to tear both the euro and the EU apart.
Look to Belgium.
After the Fortis debacle yesterday, the spread with Bunds on Belgian govvies widened to almost 100 bp.
The result: a weakening euro.
Watch this space: a full fledge currency crisis will be the result if governments don’t act quickly in unisono.
A bail-out of toxic assets held by European Banks could lead to plunge the European Union into a crisis.
There is talk that European banks may be sitting on £16.3 trillion of toxic assets and could suffer massive losses.
There is a business decision to be made as well as a policy decision.
National leaders and EU officials share fears that a second bank bail-out in Europe will raise government borrowing at a time when investors - particularly those who lend money to European governments - have growing doubts over the ability of countries such as Spain, Greece, Portugal, Ireland, Italy and Britain to pay it back.
In line with the risk, and the weak performance of some EU economies compared to others, investors are demanding increasingly higher interest to lend to countries such as Italy instead of Germany. Ministers and officials fear that the process could lead to vicious spiral that threatens to tear both the euro and the EU apart.
Look to Belgium.
After the Fortis debacle yesterday, the spread with Bunds on Belgian govvies widened to almost 100 bp.
The result: a weakening euro.
Watch this space: a full fledge currency crisis will be the result if governments don’t act quickly in unisono.
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