G20 ministers meeting to discuss eurozone debt crisis

 
French Finance Minister Francois Baroin (left), US Treasury Secretary Timothy Geithner, and Chancellor George Osborne at a previous meeting earlier this month The G20 finance ministers will have much to discuss

Finance ministers from the G20 group of nations are meeting in Paris to continue efforts to find a solution to the debt crisis in the eurozone.

While Greece remains the central focus, fears remain that the crisis could spread to other highly indebted eurozone countries such as Spain and Italy, and exposed European banks.

Greece needs its next bailout loan next month to avoid defaulting on its debt.

Spain was hit by a further credit rating cut on Thursday.

Standard & Poor's reduced Spain's long term rating by one notch, citing weak growth and high levels of private-sector debt.

It came a week after fellow credit rating agency Fitch also cut Spain's rating.

On Thursday, Fitch also downgraded the creditworthiness of UK banks Lloyds and RBS, and also Switzerland's UBS.

Funding issues

The euro rose as high as $1.3828 against the dollar in Friday trading, on optimism about the meeting of G20 finance ministers.

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It is just possible that the Greek people will have their say, that they will simply refuse to go along with austerity plans demanded by outsiders, their creditors”

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However, analysts caution that any major decisions on tackling the eurozone debt crisis will not be announced until the meeting of European Union (EU) leaders on 23 October.

These are expected to include an agreement on increasing the funding and powers of the European Financial Stability Facility (EFSF), the fund set up to help national governments in financial difficulty.

The European Commission President, Jose-Manuel Barroso, said on Friday that any decisions taken on banks or on the eurozone's EFSF rescue fund at that meeting should take effect immediately.

Mr Barroso said: "Any decision should be enforced immediately, concerning the strengthening of the EFSF or concerning increased guarantees for our banks."

Warning

Measures to protect European banks with high levels of exposure to eurozone national debt are also expected to be decided by EU leaders.

Prior to the meeting, South Africa's Finance Minister Pravin Gordhan warned that International Monetary Fund (IMF) and EU resources may be "inadequate" if the eurozone debt crisis worsened.

US Treasury Secretary Timothy Geithner disagreed, saying that both the IMF and EU already had sufficient funds.

He said: "As we look at the world today, the IMF has very substantial, uncommitted, available financial resources.

"Of course, Europe as a whole has resources available to help with the financial problems.

"The problems that they are facing there in Europe are complicated to solve, but well within the resources that Europe has."

Mr Geithner also said the G20 was looking for a "clear commitment" from Europe to deal with the debt crisis.

He told CNBC television from Paris: "What you need is the clear commitment by the governments, that they will do what is necessary to hold this together and put as much resources behind this as is necessary."

He said Europe "is clearly moving" to deal with the crisis.

Mr Geithner is expected to make a fresh call at the G20 meeting for China to allow its currency, the yuan, to trade freely.

Washington has long accused Beijing of keeping the yuan undervalued to make Chinese exports artificially competitive.

Greek focus

Athens is now likely to get its next loan instalment in November after inspectors from the EU, International Monetary Fund (IMF) and European Central Bank said they had reached agreement with the Greek government on further austerity measures in the country.

The representatives from the so-called troika had been in Athens to check on whether the Greek government was carrying out sufficient spending cuts and tax raising measures.

Greece's next 8bn euros ($11bn; £7bn) payment of EU and IMF funds has been delayed since the troika inspectors called off earlier inspections in Athens at the start of September.

However, inspections resumed after the Greek government pledged further austerity moves, despite widespread protests.

Protests against spending cuts are also continuing in Spain.

 

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  • rate this
    -1

    Comment number 42.

    21.KURGANCODE
    And so the saga goes on
    This is like watching an expensive version of musical chairs.
    Only instead of waiting for the music to stop it's a case of waiting till the implosion takes place

    +
    It suggests to me the thing they most fear is the music stopping so it's anything to keep it going. Besides, they get a lot of parties out of this.

  • rate this
    +1

    Comment number 41.

    Stop talking & tell the creditors (banks) to restructure the Greek debt now. No further tax hikes on the Greek people are going to make any difference to Greece's income, and their government is incapable of cutting any more costs. So the interest repayments must be within its current income. The banks need to face reality, otherwise they deserve to write off all their loans.

  • rate this
    +5

    Comment number 40.

    In a nutshell, the Eurozone leaders haven't got a clue what to do now. Most of them are looking at their political future/legacy, but I see them all removed from power over the next year or so as people blame them.

    Margaret Thatcher said that you can't buck the markets. The markets are driving this now and the leaders are just moving deckchairs while the EU ship is floundering.

  • rate this
    +1

    Comment number 39.

    10.jenko
    Mess what mess Greece are laughing, overspend then have your loan payment halved and the dept being paid to banks by other countries

    +

    Absolutely. They know what they're up to. What's so angry-making is that if an individual did that on their credit card and loan debt, far from receive a bail out, they'd have the bailiff's knocking on the door, home repossessed etc.Nasty, ain'it?

  • rate this
    +4

    Comment number 38.

    The new system we need to move to is a resourced based economy, The labour based monetary system is becoming obsolete due to technological advancement. The economy and society must evolve in parallel with technology. Fewer jobs actually should be a good thing because it means less needs to be done. The key for our future is to job share or reduce the working week. This should create jobs for all.

  • Comment number 37.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 36.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • rate this
    +5

    Comment number 35.

    @ 31.the6ftmoose

    Of course they have, but don't forget, they'd miss out on the chow, the night out in Paris, the free trip for spouses to go shopping, the photo shoot, and the ever important announcement that they will be meeting again in 3 weeks, and they are all looking forward to it.

    You can't video conference that!

  • rate this
    +6

    Comment number 34.

    Look out for another nice smiley family photo - and the 'Decisions deferred until November' statement....
    I soooo like the following definition of 'politics'... Poly, meaning many, and tics - small blood-sucking insects....

  • rate this
    +1

    Comment number 33.

    I don't understand; European banks will invest in Europe to resolve the problem. So where does the money come from? It sounds like a neat trick to me!

  • rate this
    +5

    Comment number 32.

    I've always been a staunch capitalist, but am starting to lose my faith in our current system. The one thing that strikes me is absolutely nobody seems to, definitively, know how to correct the current problems. It seems really bizarre that we continue with a model which is ruining peoples lives and is totally unfit for purpose. Communism sucks too, but surely there must be another way to go!!!

  • rate this
    +4

    Comment number 31.

    Haven't these freeloading baffoons ever heard of video conferencing?

  • rate this
    +2

    Comment number 30.

    All countries should just default on their debt and start again. Why not give the people the truth about what would really happen and let them decide instead of just scarmongering. Putting generations in debt is simply an abomination and should not even be considered yet they think it's fine to do so. These people should be put in jail considering the pain they are causing.

  • rate this
    +3

    Comment number 29.

    "Meanwhile, US Treasury Secretary Timothy Geithner is expected to make a fresh call for China to allow its currency, the yuan, to trade freely."

    I don't think the Chinese Yuan, is the main cause of any of these crises...!

    When China was poor, the yuan was the same! Now China is the 2nd largest economy in the world... the yuan is the same...!

    It's because we messed up, and we blame China!

  • rate this
    +2

    Comment number 28.

    Again?

  • rate this
    +1

    Comment number 27.

    There's a bigger game in play!

    According to the IMF and some economists, the Europeans just don't have the means to finance this mess!!

    Only a concerted effort by the whole world and especially the BRIC's and China can save Europe.

    There will be new rules of world trade and engagement and the east (India, China) should be in the party!!

  • rate this
    +1

    Comment number 26.

    9.Peripatetic_Scribe
    If political "hot air" was currency, we would all be living nicely in a very reasonable environment
    ---
    No, we'd have hyperinflation the like of never before seen.

  • rate this
    +6

    Comment number 25.

    cor. they look important. dont they. dont they look important.

  • rate this
    +2

    Comment number 24.

    So when is the next tranche due and the one after that and then the one after that ad infinitum? If not so serious would be a joke. Great idea buying time so banks can build up capital so they have a place to charge their haircuts. Why they haven't been charged already is beyond me. What are the auditors up to? Greeks grow olives and rarely speak German.

  • rate this
    +5

    Comment number 23.

    @20 Andrew

    The problem stems from the original bailouts, they should never have happened. Banks are private companys and operate in the "free market". If any other company was to go bust the sharholders and debtors would take the hit so what makes the banks so special that they recieve public funds?

    They should've been left to go to the wall 3 years ago.

 

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