October 11, 2011
Let’s predict the headlines for the next EU summit:
– Day before the summit: EU leaders divided ahead of crunch summit
This one comes with stories of how impossible it will be to come to any agreement and how Obama has been on the phone screaming at Sarkozy to recapitalise French banks
– Night of the summit: EU hails rescue package: ‘Crisis is over’
The usual overblown statements about how total unanimity has been reached and a comprehensive package has been agreed which would finally put an end to market turbulence.
– Morning after: Analyst unconvinced by EU deal
For this one we get a quote from a fund manager who has shorted the euro and insists the deal doesn’t go far enough and that dark days lie ahead. The euro is doomed, he reckons, and everyone should sell it and buy ‘safe’ currencies from low-debt well-governed nations like the dollar.
The truth will be somewhere in amongst all of this: there will be disagreements on how to proceed, a compromise will be reached which gives everyone a little of what they wanted but makes everyone uneasy, the deal won’t be the end of the crisis but it will help a bit, deleveraging and recapitalising the banking system will continue to be an expensive and painful process – just like fixing the Greek debt problem – but the euro won’t evaporate, nor will the EU sink into the sea.
Your turn: what headlines are your expecting?
#summit4castAuthor : Gary Finnegan