Eurozone's Rescue Plan Needs A Quick Fix
SCOTT SIMON, HOST:
This is WEEKEND EDITION from NPR News. I'm Scott Simon. European leaders meet in Brussels next week with an urgent mission: agree on a plan that to keep debt-ridden countries like Greece and Spain from default and save the euro. A plan is emerging now in broad outline - this and coordinated action by central banks around the world - boosted investor confidence. NPR's Eric Westervelt reports.
ERIC WESTERVELT, BYLINE: Midweek, the market surged on news the world's leading central banks would make it cheaper for banks to get U.S. dollars when they need them. The move underscored the rising global anxiety about the ability of European banks to make good on their debts. This is leading to a credit crunch. Banks are growing reluctant to lend to each other, which, in turn, can cut the money available to lend to businesses and lead to a downward spiral. But economist Simon Tilford at the Center for European Reform says the expanded credit lines, in fact, will have little impact on the larger crisis.
SIMON TILFORD: It's a positive step, don't get me wrong. It's a welcome step, but it's not going to be a game changer.
WESTERVELT: Then by week's end, Paris and Berlin proposed rewriting treaties for what they hope will be a new Eurozone stability union. The changes Berlin wants include tighter fiscal controls that Chancellor Angela Merkel said should be linked to stronger stricter rules for budget sinners who run up big deficits.
CHANCELLOR ANGELA MERKEL: (Speaking German)
WESTERVELT: Rules must be adhered to. We must keep close tabs on this, Merkel told lawmakers Friday. Any breaking of rules will bring about consequences. National responsibility, she said, is a prerequisite for European solidarity. As she prepared to head off to Paris and Brussels next week where talk of a new fiscal union will dominate, Merkel also told lawmakers the crisis was like a marathon and that a solution would be years in the making. That, once again, smothered hope of a quick Eurozone rescue.
And that, critics say, is the problem. Leading economists are worried European leaders lack a sense of urgency and that Chancellor Merkel's careful slow approach to solving the crisis downplays the real risks of a banking catastrophe unless the European Central Bank moves more aggressively to buy up bad Eurozone debt. The new ECB chairman has suggested a willingness to act if Eurozone countries promise to take bold steps to enforce fiscal discipline. Eric Westervelt, NPR News, Berlin. Transcript provided by NPR, Copyright NPR.