June 5, 2012G7 to Hold Emergency Eurozone Talks
Finance ministers of the Group of Seven industrialized nations are set to hold emergency talks on the eurozone sovereign debt crisis today, amid growing international concern over a potential Spanish banking crisis (Reuters). The United States and Canada have both called for the EU to take bolder action to combat the crisis and implement measures to stimulate short-term growth. At the same time, Germany has reportedly urged Spain to request bailout funds from the EU, following in the steps of Greece, Ireland, and Portugal.
Analysis
"Time to solve Spain's debt crisis is running out. Doing so requires a radical rethink in Madrid, but above all in Brussels and Berlin. Spain's government should be free to focus less on fiscal austerity and more on cleaning up the banks. Its European partners should also help by allowing joint rescue funds to be injected directly into banks," says the Economist.
"What if the European elites have got it entirely wrong and, rather than fearing and avoiding a 'Lehman moment', Europe in fact needs one in order to move beyond this interminable state of crisis? Could Greece play the part of Lehman Brothers? There is a strong argument that it should," writes Michael Tory for the Financial Times.
"But, more broadly, EU commitments have now become relative, which implies that jointly guaranteed Eurobonds cannot be the silver bullet that some hope. As long as member states remain fully sovereign, no one can fully reassure investors that in the event of a eurozone breakup, some states will not simply refuse to pay, or at least refuse to pay for the others," writes Daniel Gros for Project Syndicate.
