After plenty of rhetoric and grandstanding, European Union (EU) member nations appear to have forged an agreement on bailout efforts to struggling nations including Greece as well as future provision to, in theory, keep them more on the same page. But not everyone is sold that the gesture was much more than symbolic and a red herring to elicit a strong market reaction.
After a weekend of meetings, negotiations and, no doubt arguments, the EU decided on a measures that including upping the lending capacity of the bailout effort as long as the nations who need to borrow more agree to deeper fiscal belt-tightening. Two top speakers at the April's FCIB I.C.E. Conference in Chicago; Adolfo L. Laurenti, deputy chief economist at Mesirow Financial, and James Glassman, managing director and senior economist at JP Morgan Chase & Co.; agree that what has been announced should not have surprised markets as much as it did. They also agree that nations like Greece still need to do some major, painful and unpopular reconstructing of spending to make any agreement work. However, the speakers/economists are sharply divided on some other points of the EU agreement.
Glassman, who raised eyebrows early this month by very publicly pointing out U.S. Congressional lawmakers' deep ignorance regarding its own financial markets, believes the agreement reaffirms the nations' strong commitment to maintaining the credibility of the euro. Laurenti, on the other hand, dismisses the reported agreement for the most part noting that EU leaders long have been known for forging agreements on broad principles that later unravel when it comes to working out the finer details/specifics. He characterizes the EU's issues as proof of a massive failure of leadership.
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Brian Shappell, NACM Staff Writer