September 16, 2011 - Securing the Euro’s Future, and More
“The euro has proven itself, it’s good for us as an export nation and has increased growth and prosperity in Europe’s biggest economy, that is why it is our duty, very much in our own interest, to make our contribution to secure the euro’s future. Everything that serves the goal of securing the euro’s future must be done.” - Angela Merkel, September 16, 2011
Today in Poland
Today in Poland is a meeting of the Informal Economic and Financial Affairs Council (IEFAC). At a press conference earlier today, Greece's international rescue partners indicated they will decide in October whether to provide the country bailout loans needed to keep it from bankruptcy. As we cited on September 15, there already is in place an international consortium comprised of the Federal Reserve, the Bank of England, the Bank of Japan and the Swiss National Bank, that is providing a three-month loans to euro-area banks, in an effort to ensure they have adequate cash flow for the remainder of 2011; there is no news from China since September 14. In Poland today, however, there are discussions regarding the next €8 billion ($11 billion) installment of Greece's bailout package, which is dependent upon a review of the country's finances. But officials from the eurozone and the International Monetary Fund have delayed their assessment amid questions about whether Greece was doing enough to cut its deficit. Greece's international rescue partners will decide in October whether to give it a batch of bailout loans needed to keep it from a disastrous bankruptcy.
In attendance at today’s IEFAC meeting are ministers of finance of the EU Member States, the presidents of national central banks and representatives of the European Commission, the European Parliament and the European Central Bank, EU and international financial institutions. U.S. Treasury Secretary Geithner is also attending as a guest, a rather unusual invitation; it is speculated that Sec. Geithner is sharing the experiences learned and actions taken by the U.S. in connection with (U.S.) financial institutions restructuring, policy and legislation, and additional matters.
Dow futures were up 7 points at 9:23a today, after closing up nearly 1.7% on September 15; in part due to positive bews emerging from the EU. U.S. payroll data remains weak and consumer spending and credit demand remains tepid. U.S. manufacturing and exports are a bright spot.
Again, long-term investors should continue to adopt a global view with a well-diversified allocation attendant to risk. Equity valuations around the world remain low, as there is emerging confidence that the EU and ECB will design and implement a plan to sustain Greece, Spain, Ireland, Portugal, and Italy.