Dow Futures Higher on Hopes of Concerted European Action

| September 26, 2011 | Comments (0)

Greek Finance Minister Evangelos Venizelos says he will do 'whatever it takes' to solve Greece's debt crisis

Dow futures were higher this morning as concerted action is expected this week on Greece and the Eurozone.  At the weekend, finance officials met in Washington DC at the annual meeting of the World Bank and International Monetary Fund.

The crisis in Europe is clearly approaching a tipping point, with the main fear being contagion if (or when) Greece defaults.

Warnings have come from Treasury Secretary Timothy Geithner and from China, who fear that a disorderly Greek default could resemble a Lehman-type event and bring about another recession.

The European Central Bank has reversed itself somewhat, now committing to a lowering of interest rates at its next policy meeting on October 8, in an effort to spur economic activity.  Investors and markets are cheered as would help to stop the economic contraction in much of the Eurozone.

The Greek problem is however, still intractable.  They have no means to pay their debts and the choices are in fact between disorderly default and an orderly default.  The second question will be whether a firewall can be built around Greece to prevent speculators from attacking the other weaker countries.

We expect to begin to see the outlines of an orderly default mechanism taking shape over the next few weeks and despite protestations, a decision made as to whether Greece stays or leaves the Eurozone.

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Category: News and Opinion


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