European leaders have shown an increased resolve to address theseissues, and there is a “consensus across the board” from France,Germany and other European countries, Obama said in remarks thatsuggest Europe is considering broadening its approach to resolvingthe euro zone’s sovereign debt crisis. “I do sense greater urgency now than perhaps existed two years agoor two and a half years ago,” Obama said at a news conference towrap up four days of G8/NATO meetings. World leaders are growing increasingly alarmed that the budgetausterity approach favored by Germany threatens to drive Greecefrom the euro zone and deepen Spain’s bank problems, which couldtrigger a global financial crisis and tip the world back intorecession. For Obama, that could cost him re-election in November. Obama was joined by British and French officials over the weekendin calling for bolder action ahead of a crucial meeting of EuropeanUnion leaders on Wednesday first called to discuss adding a growthplank to their fiscal strategy.
Obama’s remarks point to a four-pronged approach that wouldencompass financial, economic, fiscal and monetary measures toaddress the euro zone crisis that he said were embraced by leaderswho attended a G8 summit in Maryland and the NATO sessions in hishome town of Chicago. “We’ve got to put in place firewalls that ensure that countriesoutside of Greece that are doing the right thing aren’t harmed justbecause markets are skittish and nervous,” Obama said. “We’ve got to make sure that banks are recapitalized in Europe sothat investors have confidence. And we’ve got to make sure thatthere is a growth strategy to go alongside the need for fiscaldiscipline, as well as a monetary policy that is promoting thecapacity of countries like a Spain or an Italy to put in place verytough targets and some very tough policies,” Obama said.
These measures would offer the people in the affected countries theprospect for economic growth, jobs and growing incomes, he said. ‘WE STILL HAVEN’T DONE ENOUGH’ British Prime Minister David Cameron sent a similarly urgent pleato European leaders for firm action, noting that 40 percent ofBritish exports go to the euro zone. “The truth is we still haven’t done enough to decisively resolvethe crisis,” Cameron told a news conference during a NATO summit.He also said that bank recapitalization, firewalls and a moreactive policy from the European Central Bank were needed, as wellfuture plans for a common euro zone bond. International bankers also are pressing European leaders in privatemeetings for quick action. The Institute of International Finance (IIF), a global associationof financial institutions, estimates total credit exposure toGreece at $460 billion of which $70 billion is to private sectorinvestors, mostly in Germany and France. Samsung Galaxy S2 Chargers
The private sectorexposure to Spain is much larger. “There has to be concrete progress to stabilize market conditions,”said Hung Tran, IIF deputy managing director. At the least, the IIF said it would like to see direct injection ofEU bailout funds into under-capitalized banks – an issue that couldbe discussed at the EU dinner this week. Germany has resisted the idea, partly because it would require newrules for its bailout monies and make bank risk an EUresponsibility while regulation remains primarily at the nationallevel. Samsung Car Phone Chargers Manufacturer
But France and Italy are advocates. Another issue that needs addressing is bank deposit insurance, Transaid. One proposal is for the EU to offer an umbrella backup tonational deposit insurance schemes. This could prevent a bank runif a sovereign government runs into financing problems. But he saidrecapitalization is a priority. Incase iPad Car Charger
Spain reported last week that bad loans in its banks have risen totheir highest in 18 years, underscoring problems the governmentfaces as independent auditors begin looking at the depth of theproblem in its banking sector. The size of bad loans has raisedquestions over how Spain could afford to help recapitalize itsbanks. French President Francois Hollande has said he will push a proposalfor mutualizing European debt at the informal summit of EU leadersin Brussels this week. This would be one way to help out deeplyindebted countries like Spain, Italy and Greece. But it increasespressure on German Chancellor Angela Merkel to drop her oppositionto the idea.
(Reporting by Caren Bohan, Mary Milliken, Stella Dawson, AdrianCroft, Luke Baker; Writing by Stella Dawson; Editing by WillDunham).