Discord and reluctance to comply are stalling efforts by the European Leaders to buy enough time to institute a bailout rescue plan that will restore confidence to European markets.
This Website Is For Financial Professionals Only
France and Germany are at odds on a timetable to introduce joint oversight of the European banking sector. Delaying creation of the unified oversight body into next year would derail recent success and magnify the turmoil that recent agreements were designed to abate.
The banking union is critical to resolving the communication gap between banks and distressed countries. There is also disagreement on the conditional mandates for countries requesting aid.
One of the requirements for giving aid to Spain is a request for aid by Spanish Prime Minister Mariano Rajoy. Rajoy is under pressure politically and is reluctant to accept the stringent austerity terms tied to aid.
Borrowing costs have fallen substantially since the announcement by European Central Bank (ECB) chief Mario Draghi that the ECB would do whatever it takes
to resolve its sovereign debt issues as well as the agreement reached to create the European Stability Mechanism (ESM).
As well, Finland and The Netherlands are still adamantly resistant to the idea of shoring up the funding capability of the ESM with external funding.
So, little has really changed in the European front because the details involved in following through on these pronouncements are still substantially in flux.
This will continue to impact the global economy and add to the still significant uncertainties in the US economic recovery.