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Eurozone crisis and Greece solutions needed before Cannes G-20

The sense of urgency for a solution to Eurozone problems has increased with market reaction clearly indicating intolerance with the current pace of progress especially of late concerning the establishment of the European Financial Stability Facility and a solution for Greece. Time is ticking and the medicine that needs to be taken and the solutions that need to be found for Greece and concerning Eurozone debt problems in general should probably be done so before the Cannes G20 Summit in November, he says.
EFSF ratification
There are some significant steps to take these days like key Eurozone member votes on EFSF ratification. Despite previously strong opposition to further rescue measures for troubled Eurozone members, anything but ratification is unlikely, says Steen Jakobsen, chief economist, Saxo Bank in this video. The Slovenian parliament has already given its thumbs up and Finland, Austria and Germany are expected to follow suit in the coming days. Though once approved by all member states this supposed knight in shining armour will not be able to ride easily to the rescue of failing nations. Unanimous (not majority) votes are required for decisions - like an expansion of the facility - to be passed.
Protecting banks
Meanwhile, talk about the concept of a European Investment Bank leveraging on the EFSF to ring-fence European banks from any fallout from the EU debt crisis, is hardly seen as a band aid but rather a ploy which will hardly solve anything, according to Steen.
Greece’s predicament
Steen likens Greece’s attempts at new austerity packages as an attempt to save the troubled nation at the goal line. With 99 percent probability of default talk of saving Greece is actually quite comical, he says. Meanwhile, austerity fatigue is apparent as evidenced by more strikes across Athens. Ultimately Greece needs debt forgiveness and a clean slate but a free-ticket would hardly go down well with other troubled Eurozone nations. Nevertheless, Greece has become kind of a scapegoat due to increased talk of contagion (which is not an economic concept but rather a policymakers’ excuse for not doing what needs to be done domestically). Contagion or not, it doesn’t change the fact that there is no way out for Greece other than default, says Steen.

For more comments by Steen Jakobsen see his blog Steen's Chronicle on TradingFloor.com

09:16 minutes
Tags: austerity, cannesg-20, contagion, debt, efsf, europe, eurozone, forex, greece, reutersforex, steenjakobsen, tradingfloor.com

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