"Update: About the results of the latest euro-rescue summit
(1) The real results concern aid for the banks. Necessary actions to improve bank liquidity, but ineffective without broader policy action.
(2) Approval for more and deeper austerity policies. In fact, locking EU fiscal policy into a straitjacket as a recession looms ahead. Europe’s leaders have learned nothing from 1929-32, and nothing from the great progress in economic theory since then. This could have horrific results! Future generations will not understand.
(3) They hope (again) to get more aid from the BRICs (Brazil, Russia, India, China) via the IMF. This is delusional. The BRICs did nothing earlier this year, when hopes were higher for effective EU action AND the BRICs were stronger. Now all four BRICs have serious problems at home; substantial help for the rich folks of Europe from the poorer BRICs seems unlikely.
(4) Most important, they have done nothing to address the imbalances within the EMU that caused the crisis — and drive the current downturn.
This is, as many have said, like the Captain of the Titanic convening a seminar on metallurgy after they hit the iceberg"
EconoMonitor : EconoMonitor » The Simple Explanation of Why Night Falls Over Europe
"Thus, if all of the global economy’s largest pieces fall into place, there is no reason why 2012 should be a disaster. But muddling through cannot continue forever. Europe needs to draw a line under its crisis and figure out how to grow. The US needs to overcome its political polarization and policy gridlock. And China needs to rebalance its economy – shifting from construction and exports to household consumption as the main engine of growth – while it still has time.
Of course, if none of this happens – or if not enough of it does – 2013 could turn out to be the annus horribilis of the perma-bears’ dreams."
Barry Eichengreen : El desastre puede esperar
"Moody's on Friday downgraded France's three largest banks, BNP Paribas, Credit Agricole and Societe Generale in light of what the US rating agency said were "liquidity and funding constraints". The banks' downgrade came despite Moody's acknowledging the three lenders could depend on a higher level of French taxpayer support in future.
Two weeks ago, rumours abounded that it was the near failure of a major French lender that had been the trigger for a massive co-ordinated intervention by the world's largest central banks to shore up the banking system.
The fear is the European authorities do not have the financial firepower to deal with the banks' problems. Analysts at BarCap say that even if the European rescue funds were able to raise €1 trillion of funding this would only meet the needs of the Italian and Spanish government and banks.
The European banking sector's problems are being exacerbated by a wave of asset sales as lenders look to dramatically shrink their balance sheets. UBS estimates eurozone banks could sell off between €3.7 trillion and €4.5 trillion of assets in the next three years."
10:01PM GMT 09 Dec 2011