This week is probably a do or die, make or break week for Euro as EU leaders gather for the EU Summit on 9th Dec, the last for the year to resolve the 2 years long Euro debt crisis. Failure to do that will result in systemic failure in global financial system and could drag the whole world into recession again after the 2008 US sub prime crisis. Pressure is on the EU leaders for sure to get something done and not just empty talk again.
There have been numerous news or rumors of what to expect from the Summit. To put it in a more cautiously fact and avoiding over expectation, news emerged from EU leaders and chief of ECB should be what to expect in the meeting. Any others from analysts probably is just a "hope" and that should rule it out.
EU Finance Ministers have a meeting few days ago to trash out the technical detail of the leveraging the EFSF and that is what expected from the Summit. How much will be leverage and where the money from should be reveal in the Summit. Germany and France leaders also proposing a fiscal union of treaty changes to the Euro nations and the content of those should be set of rules in which Euro nations have to follow strictly in term of managing their country's deficit in order to stay within the Euro.
ECB will have a meeting tonight to decide on the interest rate and most believe it will cut another 25 basis point after the last recent cut. Furthermore, news from ECB official also saying plan of additional measures to stimulate bank lending after 6 Central Bankers led by US Fed to lower USD swap line last week.
Those 3 steps will not solve the debt crisis overnight but is another positive step following October Summit in a long fight to stem out the crisis. Global stock markets have been moving up past days with probably optimism but do cautious of not being over optimism. However, be on the pessimistic side would not be a wise move either. EU leaders all know the catastrophic if the crisis is not contained and will be working hard on measures to maintain the Euro from breaking up. The damage of breaking up Euro might even be more than the pain EU is going through now.
Advise for investors is not to get too over optimistic or pessimistic as the Euro debt crisis will eventually get resolve, it is just a matter of time.
