U.S. President Barack Obama declared the U.S. combat mission in Iraq ended on Tuesday, but said the U.S. commitment to Iraq has not ended as he urged its leaders to quickly form an inclusive government.
He also said in a White House speech that the United States is able to apply more resources in Afghanistan because of the change in Iraq, and that the pace of the U.S. drawdown in Afghanistan will depend on conditions on the ground, but start on schedule in July 2011.
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Tags: IRAQ MILITARY ACTIONS BY THE U.S.A. HAVE ENDED, Obama: "Operation Iraqi Freedom is over"
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29JulMovers & Shakers, banking, breaking market news, breaking news, breaking stock market news, breaking stock news, fed action, global economy, government, market analysis, market facts, market projections, markets, money, mutual funds, short term investments, stockmarket analysis, stocks, technical analysis, trend, usa economics No Comments
Economists see tepid recovery deep into 2011
The U.S. economic recovery will remain slow deep into next year, held back by shoppers reluctant to spend and employers hesitant to hire, according to an Associated Press survey of leading economists.The latest quarterly AP Economy Survey shows economists have turned gloomier in the past three months. They foresee weaker growth and higher unemployment than they did before. As a result, the economists think the Federal Reserve will keep interest rates near zero until at least next spring.
Yet despite their expectation of slower growth, a majority of the 42 economists surveyed believe the recovery remains on track, raising hopes that the economy can avoid falling back into a “double-dip” recession.
The AP survey compiles forecasts of leading private, corporate and academic economists on a range of indicators, including employment, consumer spending and inflation. Among their forecasts:
•Economic growth the rest of this year and early next year will weaken, to less than 3 percent. From January through May, the economy grew at roughly a 3.5 percent pace.
•The unemployment rate will be no lower at the end of the year than it is now — 9.5 percent. A majority think it will be 2015 or later before the rate falls to a historically normal 5 percent.
•State budget shortfalls pose a “significant” or “severe” risk to the national economy. The loss of tax revenue has forced state and local governments to cut services and lay off workers.
The weak economy leaves Democrats and Republicans on Capitol Hill vulnerable as they head into the November midterm elections. Democrats, who now control both chambers, have the most to lose. The gloomier outlook is also a liability for President Barack Obama.The economists have turned more pessimistic since the recovery hit turbulence in May. Europe’s debt crisis sent tremors through Wall Street, causing stocks to tumble and raising doubts about the durability of the rebound.
Since then, businesses have been slow to step up hiring. Americans’ confidence in the economy has declined, leading shoppers to reduce spending. And the housing market has weakened further with the end of a homebuyer tax credit that had buoyed sales earlier this year.Consumers aren’t leading this rebound, as they usually do, despite ultra-low borrowing costs. Their spending growth will weaken in the second half of this year and strengthen only slightly next year, a majority of economists said. They think shoppers’ reluctance to spend more money poses a “significant” or “severe” risk to the recovery.
“It seems like we hit an air pocket in consumer spending,” said survey participant Richard DeKaser, president of Woodley Park Research.
Kasey Doshier, a graphic designer in Chicago, said the recession taught her to rein in her spending. The key moment came early last year, when her employer cut her pay 15 percent to avoid layoffs.
“I just lived paycheck to paycheck and had a good time,” said Doshier, 32. “It’s kind of scary to think that I am a paycheck away from being homeless.”
Doshier’s pay has been reinstated, but she’s still watching her money. Dinner and drinks with friends are gone. Now she goes to free street festivals and the city pool. She explores Chicago neighborhoods by taking her dog on long “adventure walks.”
The tight job market, scant pay raises and drooping home values are forcing others, too, to spend less and save more. Americans saved 4.2 percent of their disposable income last year. That was the highest level since 1998. Economists expect roughly the same level of saving this year and next.
That’s why growth of less than 3 percent is forecast into 2011. And weak growth helps explain why unemployment is likely to stay high. It takes about 3 percent growth just to create enough jobs to keep pace with the population increase.
Growth would have to equal 5 percent for a full year to drive the unemployment rate down by 1 percentage point. Neither the economists in the AP survey nor the Obama administration expects that to happen.
The Fed’s outlook has turned bleaker, too. It’s why Chairman Ben Bernanke and his colleagues are weighing new steps to invigorate the economy if the recovery shows signs of backsliding. They are also expected to hold interest rates at record lows longer than economists thought three months ago.
A survey the Fed released Wednesday showed the economy facing a bumpy path back to health. The pace of economic activity remained modest in most of the country.
Most economists surveyed said the Fed would being raising short-term rates no sooner than next spring. In the last survey, most had thought it could happen as soon as late this year.
At the same time, state budget shortfalls have emerged as a major threat in the economists’ view. State and local governments cut their spending in the first three months of this year at a 3.8 percent pace. That was the biggest cutback since the second quarter of 1981, just before the economy entered a severe recession.When states and localities tighten spending by trimming services and jobs, the cutbacks ripple through the broader economy, causing individuals to spend less, too. The drop in state and local government spending shaved about half a percentage point off the U.S. gross domestic product in the first three months of this year.
Nearly two-thirds of the economists view the states’ budget crises as a significant or severe threat to the rebound.
Despite such risks, 55 percent of the economists described the recovery as “on track” as of the middle of the year. The rest said it was “faltering.”
“There’s a risk that the loss of momentum will snowball and feed on itself, but I think in the end the recovery will stay on track,” predicted another survey participant, James O’Sullivan, global chief economist at MF Global.
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23Julbreaking market news, breaking news, breaking stock market news, breaking stock news, breaking wall street news, debt, fed action, global economy, government, liquidity, money, trend, usa economics No Comments
White House Predicts Record Deficit
New White House estimates predict an unemployment rate of 9 percent and a budget deficit of $1.42 trillion next year — even bigger than previously expected.Officials Say Gov’t Now Borrowing 41 Cents Of Every Dollar Spent
New estimates from the White House on Friday predict the budget deficit will reach a record $1.47 trillion this year. The government is borrowing 41 cents of every dollar it spends.
That’s actually a little better than the administration predicted in February.
The new estimates paint a grim unemployment picture as the economy experiences a relatively jobless recovery. The unemployment rate, presently averaging 9.5 percent, would average 9 percent next year under the new estimates.
The Office of Management and Budget report has ominous news for President Barack Obama should he seek re-election in 2012 - a still-high unemployment rate of 8.1 percent. That would be well above normal, which is closer to a rate of 5.5 percent to 6 percent. Private economists don’t think the unemployment rate will drop to those levels until well into this decade.
“The U.S. economy still faces strong headwinds,” the OMB report said. They include tight credit markets, a high inventory of unsold housing and retrenchment by state governments bound by balanced budget mandates. The European debt crisis has also had an impact.
“Despite these headwinds, the administration expects economic growth and job creation to continue for the rest of 2010 and to rise in 2011 and beyond,” the report said.
The gaping deficits are of increasing concern to voters. But Obama and Democrats controlling Congress are mostly taking a pass on deficit reduction this year as they await possible recommendations from Obama’s deficit commission.
While there’s a slight improvement in the deficit for the current year compared to the administration’s February forecast, next year’s predicted $1.42 trillion worth , next year’s predicted $1.42 trillion worth of red ink - that’s 37 cents of borrowing for every dollar spent - is looking worse. It’s about $150 billion more than previously predicted, because of still-slumping tax revenues.
The current record holder is the $1.41 trillion deficit for 2009.
Economists agree that the most important measure of the deficit is against the size of the economy. Opinions vary, but many economists say a deficit of 3 percent of gross domestic product is sustainable since it would stabilize the overall debt when measured relative to the economy.
The report put the deficit at 10 percent of GDP this year and 9.2 percent of GDP next year. It would never reach the 3 percent figure under Obama’s predictions - which underestimate war costs and depend on assumptions of tax hikes that may not materialize.
OMB Director Peter Orszag said the numbers represent a “fiscal situation that requires attention.”
Obama “has done little to confront this domestic enemy,” said Rep. Mike Pence, R-Ind. “Washington desperately needs real leadership. We cannot continue to postpone the hard choices and sacrifices that are necessary to stop this fiscal train wreck.”
Deficits have skyrocketed since the recession took hold in 2008 and Congress responded with a massive bailout of the financial system and last year’s $862 billion stimulus measure.
“What we should be doing now is putting in place deficit reduction policies that will kick in after the economy has more fully recovered,” said Senate Budget Committee Chairman Kent Conrad of North Dakota. “It is an unsustainable long-term course.”
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Federal budget gap tops $1 trillion through June
Federal budget gap through June tops $1 trillion amid GOP resistance to more gov’t spending
The federal deficit has topped $1 trillion with three months still to go in the budget year, showing the lasting impact of the recession on the government’s finances.
In its monthly budget report, the Treasury Department said Tuesday that through the first nine months of this budget year, the deficit totals $1 trillion. That’s down 7.6 percent from the $1.09 trillion deficit run up during the same period a year ago.
Worries about the size of the deficit have created political problems for the Obama administration. Congressional Republicans and moderate Democrats have blocked more spending on job creation and other efforts. Republicans also have held up legislation to extend unemployment benefits for the long-term jobless because of its effect on the deficit.
Another failed effort would have provided cash-starved states with money to help avoid layoff of public employees and finance the Medicaid program for the poor and disabled.
President Barack Obama also encountered resistance to further stimulus spending at a meeting of the Group of 20 major industrial nations last month in Toronto.
Obama expressed concerns about the risks to a fragile global recovery from withdrawing spending too soon. But the G-20 adopted targets to cut deficits in half as a percentage of their economies over three years.
The deficit in the federal budget in June totaled $68.4 billion, the second highest June deficit on record, but down from the all-time high of $94.3 billion in June 2009, a month when the government was spending heavily to stabilize the financial system and jump-start economic growth.
June is normally a surplus month as the government collects tax payments from corporations and individuals who make quarterly payments. Only seven years in the past 56 have seen deficits in June.
Many private economists are forecasting that the deficit for the entire budget year, which ends on Sept. 30, will come in around $1.3 trillion. That would be the second highest deficit on record, but it would be down slightly from last year’s all-time high of $1.4 trillion.
The Obama administration is forecasting that the deficit for the 2011 budget year, which begins Oct. 1, will remain above $1 trillion for a third straight year, projecting an imbalance of $1.27 trillion. And the administration predicts the imbalances over the next decade will total $8.5 trillion.
The deficits have been driven higher by the lingering effects of the worst recession since the 1930s. About one-third of the higher deficits in this period are a result of a drop in government tax revenues.
The other two-thirds of the deficit increases reflect higher government spending to stabilize the financial system with the $700 billion bailout program and the $787 billion stimulus program that Congress passed in February 2009. The increased spending also reflected added demands for such programs as unemployment benefits and food stamps.
The tide of red ink has sparked a political backlash with surveys showing rising unhappiness among voters with the ballooning deficits.
Through the first nine months of the current budget year, government revenues have totaled $1.6 trillion, up 0.5 percent from the same period a year ago.
Government spending totals $2.6 trillion, down 2.8 percent from the same nine months a year ago. That decline primarily reflects lower spending on the financial bailout effort as banks are now repaying the billions of dollars they received to bolster their capital reserves at the peak of the financial crisis.
Obama has appointed a national debt commission to report after the November midterm elections on ways that the federal deficits can be brought under control.
The heads of the panel told the National Governors Association on Sunday that everything needs to be considered including curtailing popular tax breaks, such as the home mortgage deduction.
“The debt is like a cancer,” Democrat Erskine Bowles told the governors. “It is going to destroy the country from within.”Tags: $1 Trillion Dollars, 1000000000000.00, Federal budget gap tops $1 trillion through June, Trillion Dollars
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FMS, SAP, BAMXF, SI, BAYZF, SBGSY, LVMUY, PDRDY, ASML, LUX : Barron’s list of 10 Europe-based global powerhouses
Tags: ASML, BAMXF, Barron's list of 10 Europe-based global powerhouses, BAYZF, FMS, LUX, LVMUY, PDRDY, SAP, SBGSY, SI
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31MayFinancial transaction, Movers & Shakers, breaking market news, breaking news, breaking stock market news, breaking stock news, breaking wall street news, daily stock tips, daytrades, fed action, financial settlement, free stock info, global economy, market analysis, market facts, markets, short term investments, stockmarket analysis, stocks, trading, trading ideas, trend, usa economics No Comments
2010 The Worst May in a Half-Century
Assessing damage from the worst May since 1962.
THE STOCK MARKET SUFFERED its worst May in a half century, but there’s a bright side to the darkening mood: A 12.3% slide since late April and greatly diminished expectations mean any good economic news this summer might, once again, carry a jolt of surprise.Within a month, our focus has swung from convalescing corporate profits to Europe’s fiscal chaos and the drag on global economic growth. A 14-month rally without major setbacks has also swelled the throng of uneasy investors who were anticipating, quite rightly, a correction — and who were poised to sell.
.How worried have we become about global growth? A recent survey showed the huddle of bearish investors (51%) dwarfing the bulls (30%) by the biggest margin since last summer. Money managers lunging at options to protect their portfolios drove the VIX volatility index above the 40 threshold for just the sixth time ever — joining, in the panic hall of fame, the 1987 stock-market crash, the 1998 Russian financial crisis, the dot-com bubble collapse, the Sept. 11 attacks and the 2008 credit crunch.
For investors, the most pressing question now is how much damage is already factored into retreating stock prices. The market now trades at roughly 11 times what Standard & Poor’s 500 companies are expected to earn over the next two years — slightly below its 25-year average, but richer than the stricken 8 multiple when this bull market unfurled, in March 2009.
Morgan Stanley’s global strategist Gerard Minack thinks the market would have made “a reasonable allowance” of the downside risk to earnings at 10 times. That’s roughly 9% below the current level, and it assumes sovereign stress remains contained and economic data point to slower growth but no hard landing. “There is a risk the growth slowdown is more pronounced in 2011, but we doubt investors will see enough news to price in such a risk in, say, the next one to two quarters,” he notes. In other words, the S&P 500 at 1000 might have priced in the second half’s “probable” risks.
Last week, the S&P 500 dipped as low as 1041 before rebounding, and the swings were frequent and violent. An early plunge on Tuesday drew buyers, but Wednesday’s early rally was promptly sold. Thursday’s 3.3% surge, after China said it wasn’t bailing on European debt it held, fizzled Friday after a rating agency did something neither original nor startling: It downgraded Spain’s credit rating. Consumer spending was flat in April, Dreamworks Animation (ticker: DWA) drooped after the fourth installment of Shrek, which is one installment too many, disappointed at the box office, while Hugh Hefner showed you can’t have too many playmates and mansions — Playboy Enterprises’ (PLA) plan to open two clubs in Macau lifted partner Las Vegas Sands’ (LVS) shares 12%.
.The S&P 500 eked out a 2-point gain to finish the flip-floppy week up 0.2% at 1089. It is still 10.5% off its late-April high. The Dow Jones Industrial Average fell 57, or 0.6%, to 10,137. The Nasdaq Composite Index rallied 28, or 1.3%, to 2257, its second gain in three weeks, while the Russell 2000 added 12, or 1.9%, to 662. But European and Chinese stocks rebounded nearly 3%, both snagging their second gain in three weeks, while copper halted a four-week slide.
With U.S. markets closed Monday for Memorial Day, the S&P 500 will end this month down 8.2% — its worst May since 1962, and the biggest monthly slide since February 2009, just before this bull market began. The May losses totaled 7.9% for the Dow, 8.3% for the Nasdaq, and 7.7% for the Russell.
EMERGING MARKETS AREN’T immune if global growth sputters, but is the new world unfairly flogged for the old world’s budgetary sins? Before Thursday’s rebound, the MSCI Emerging Market iShares (EEM) were off 15% from their late-April peak, barely better than the 17% drubbing meted out to the MSCI EAFE iShares (EFA) that track developed markets. Have we swung so far from the abandoned notion of “decoupling” economies that we now expect all markets to be fused at the hip?
Emerging markets unencumbered by debt are struggling for other reasons: Some of their economic indicators are stalling, and the stronger dollar threatens their export-dependent economies. But if the looming global slowdown is to be blamed on developed countries’ fiscal wantonness, then emerging markets’ chaste balance sheets ought to offer some solace. China’s public debt, for example, is just 18% of its gross domestic product, compared with nearly 200% for Japan. In fact, emerging markets’ ratio of debt to GDP averages 37% — a fraction of the developed world’s 94%. Even Israel, the emerging nation with the highest debt-to-GDP ratio, 78%, has been plucked from those ranks and newly reclassified as a developed market.
Calling emerging markets “the baby getting thrown out with the bath water,” Bespoke Investment Group founder Paul Hickey listed a dozen American depositary shares of emerging-market companies whose charts look strong even after the recent correction. These include the Brazilian beverage company Companhia de Bebidas das Americas (ABV); Chinese Internet search company Baidu (BIDU); America Movil (AMX), a Mexico-based telecom giant; and Peruvian bank Credicorp (BAP).
Blame Europe: The old saw about selling in May and going away has never been so right, as fear of slowing global growth sent the Dow down 7.9% this month.
.With Europe hobbled and the U.S. humbled, emerging markets’ short-term fate may depend disproportionately on China. Ironically, trouble in Europe helps reduce the odds that China’s economy will overheat. In fact, the hit to global growth gives China’s central bank some breathing room in its crusade to tighten monetary policy, says Morgan Stanley’s China economist Qing Wang. The firm deems a hard landing in China in the foreseeable future “unlikely,” is overweight Chinese stocks, and continues to recommend developed world stocks that are exposed to emerging markets.ARGON ST, WHICH MAKES sensors for military intelligence, has been on the radar of big defense contractors ever since it hired financial advisers and reportedly began shopping itself to giants like Raytheon (RTN). and Boeing (BA). But the speculative frenzy has subsided a little, and the stock price has fallen more than 10%.
The decline can’t all be blamed on the market correction; the small defense intelligence specialist also reported underwhelming second-quarter earnings.
This takes Argon (STST) to an intriguing juncture: With shares near 24, down from their 2010 peak above 27, Oscar Gruss’ special situations analyst Bill Kavaler pegs the potential stock upside at $6 if a suitor surfaces, although shares could fall $2 if no deal is reached.
Argon shares aren’t cheap, and already fetch 21 times projected profits, but small contractors with proprietary know-how typically command a premium, and Argon’s multiple is still just shy of its median over the past five years. Although fiscal belt-tightening doesn’t bode well for defense budgets in general, Argon specializes in the kind of reconnaissance and surveillance technology that can help the leaner armies of tomorrow.
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Dow falls over 1 percent after Spain downgrade
^DJI 10,163.16 -95.83
NASDAQ 2,253.83 -23.85
NEW YORK (Reuters) - Stocks added to losses on Friday, pushing the Dow down more than 1 percent, after Fitch downgraded its rating of Spain.The Dow Jones industrial average (DJI:^DJI - News) was down 119.94 points, or 1.17 percent, at 10,139.05. The Standard & Poor’s 500 Index (^SPX - News) was down 15.13 points, or 1.37 percent, at 1,087.93. The Nasdaq Composite Index (Nasdaq:^IXIC - News) was down 32.14 points, or 1.41 percent, at 2,245.54. The S&P 500 and the Nasdaq each fell more than 1 percent earlier in the day.
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21Maybreaking market news, breaking stock market news, breaking stock news, breaking wall street news, daily stock tips, free stock tips, global economy, government, trading No Commentsglobal markets slide as contagion spreads…North Korea is making war threats against South KoreaLee Meets South Korea Security Staff as North Makes War ThreatsSouth Korea’s President Lee Myung Bak convened a National Security Council meeting as North Korea threatened to sever all ties and reiterated its war threat after being accused of sinking one of the South’s warships.Lee called his advisers to discuss the North’s “military provocation” that violated the United Nations Charter as well as an armistice agreement, a statement posted on the presidential website said. “As the issue is grave and significant, we should be very prudent about every corresponding measure we prepare without single mistake,” he was quoted as saying at the start of the meeting.Tensions flared yesterday after an international panel released a report saying evidence including torpedo parts provided “conclusive” proof of North Korea’s role in the March 26 sinking, which killed 46 sailors. South Korea demanded a “stern” global response to the report and the U.S. and Japan said they would support measures against the North.North Korea “will regard the present situation as the phase of a war and decisively handle all matters arising in the inter-Korean relations,” an unidentified spokesman from the Committee for the Peaceful Reunification of Korea was cited as saying by the state-run Korean Central News Agency today.‘A Charade’Kim Jong Il’s regime today called the report a “charade” and said any South Korean retaliation would lead to the “total freeze of inter-Korean relations, the complete abrogation of the North-South agreement on non-aggression and a total halt to the inter-Korean cooperation undertakings.”“We gathered here today to review the various aspects of the incident and what impact it will bring to our society internally and internationally,” Lee said at the meeting, adding that South Korea may release statements to its people and the international community based on today’s discussion.The Korean won and South Korean stocks fell yesterday after North Korea threatened “all-out war” if the United Nations uses the findings to toughen sanctions imposed after the country carried out its second nuclear test in 2009. Today is a public holiday in South Korea.South Korean Defense Minister Kim Tae Young rejected as “outrageous” a North Korean request to send a team to examine the evidence contained in the report. Kim told reporters in Seoul that the government may raise its military surveillance alert level.South Korea and North Korea remain technically at war since their 1950-1953 conflict ended in a cease fire. The deadliest attack blamed on North Korea was in 1987 when a South Korean airliner was downed, killing 115 people.
Tags: global markets slide as contagion spreads...North Korea is making war threats against South Korea
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18MayMovers & Shakers, breaking market news, breaking news, breaking stock market news, breaking stock news, breaking wall street news, global economy, trading ideas No Comments
The new bear market: China
Resist the urge to buy in China’s bear market; the better bet is to use caution.It’s official. China is now in a bear market.
Technically defined as a 20% decline following a rally of at least 20%, the bear surfaced in Chinese stocks last week when the Shanghai Composite index posted losses that took it 21% below November 2009 highs.
While it may be tempting to buy Chinese stocks on such a large retreat for stocks of companies working in an economy with robust 11.9% annual growth, it’s wiser to remain cautious with this bear.
It’s no cute and cuddly panda just yet, if history is any guide.
On average since 1990, Chinese bear markets take stocks down 35%, according to the market research firm Bespoke Investment Group, and the current 23% decline isn’t even close. Plus the Shanghai Composite last week fell below last August lows of 2,667.75, a negative technical sign.
“The current technicals suggest that there’s more downside in store for China’s bear market in stocks,” says Bespoke Investment Group.
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09Maybreaking market news, breaking news, breaking stock market news, breaking stock news, breaking wall street news, deals, debt, equity, fed action, free stock info, free stock picks, free stock tips, global economy, market facts, markets, short term investments, trading, trading ideas, trend No Comments
E.U. Offers $957 Billion Rescue Package
European leaders, pressured by sliding markets and doubts over their ability to act in unison, agreed on Sunday to provide a huge rescue package of nearly one trillion dollars in a sweeping effort to regain lost credibility with investors.
After more than 10 hours of talks, finance ministers from the European Union agreed on a deal that would provide $560 billion in new loans and $76 billion under an existing lending program. Elena Salgado, the Spanish finance minister, who announced the deal, also said the International Monetary Fund was prepared to give up to $321 billion separately.
Officials are hoping the size of the program - a total of $957 billion - will signal a “shock and awe” commitment that will be viewed in the same vein as the $700 billion package the United States government provided to help its own ailing financial institutions in 2008.
The leaders were making yet another attempt to stem a debt crisis that has engulfed Europe and global markets. Underscoring the urgency, President Obama spoke to the German chancellor, Angela Merkel, and the French president, Nicolas Sarkozy, on Sunday about the need for decisive action to restore investor confidence.
New political complications in two of Europe’s most important countries added to the challenge. In Germany, voter anger at the effort to save Greece cost Ms. Merkel an important regional election Sunday, undermining her leadership , and in Britain, the government remained in a state of suspended animation because of the inconclusive Parliamentary elections last week.
The package comes at a time of mounting financial unease. Riots in Greece, ever-tightening terms of credit and the unexplained free fall in the American stock market last Thursday have compounded the sense that the European Union’s inability to address its sovereign debt crisis might lead to the type of systemic collapse that followed the fall of Lehman Brothers.
What appeared to be emerging from the discussions represented a partial retreat from a system discussed earlier in the day that would have radically expanded the powers of the European Commission to raise funds.
Instead, the diplomats said, the ministers were discussing an alternative — a system that would speed up the pace at which states that use the euro currency could lend to one another, but on a bilateral and voluntary basis. The diplomats spoke on condition of anonymity because the discussions were ongoing.
The diplomats said that the I.M.F. would be expected to play some role in an overall aid package. But they said the fund’s contribution probably would remain separate to the loan guarantees offered by euro-area member states and loans managed by the European Commission.
An I.M.F. contribution of 220 billion euros would bring the total of new loan guarantees to 720 billion euros, or more than $900 billion.
While the sums being discussed are eye-catching, some bankers questioned whether they would be enough to calm the markets. One banker said that with more and more European economies coping with rising deficits that raising, guaranteeing or backing such a large number would not be an easy task — unless the European Central Bank stepped in a more forceful and specific manner. The bank has so far rebuffed calls to inject liquidity into the markets by buying back European bonds.
There were many complications in trying to forge a consensus on a new package. They included defining the role of Britain, which lies outside the euro zone and had said it would not help in propping up the euro, as well as the European Central Bank. The fractiousness underscores the frailty of a monetary union in which its richest member, Germany, is also the most opposed to a financial rescue.
“The fact that they are worried is clear,” said David Marsh, the author of the Euro, a book on the history of monetary union. “But I don’t think that there is enough commitment or economic firepower in Germany to provide the massive loan guarantees to satisfy the markets.”
Predictably, politicians blamed speculators for the market upheaval. The Swedish finance minister, Anders Borg, said immediate action was needed to tackle “herd behaviors in the markets that are really pack behaviors, wolf pack behaviors.” Mr. Borg warned that volatility in markets could “tear the weaker countries apart.”
Since it became clear that Greece would not be able to meet its financial obligations and fears spread that other indebted nations like Spain, Portugal and Ireland would have similar troubles, Europe, hampered by Germany’s opposition to a bail out, has responded with measures that have been seen as too little too late.
Even now, despite the lashing rhetoric and the Sunday night pan European meeting, there is still a feeling that Europe should be doing more — notably with regard to freeing the European Central Bank to go against its charter and print money by buying back distressed European bonds from the secondary market.
Sunday’s meetings represented an extraordinary convergence of diplomatic activity, crammed into a tight time frame. Political leaders including President Nicolas Sarkozy of France said early Saturday morning, at the end of an earlier summit meeting, that a loan mechanism intended to restore confidence should be ready by Monday morning. That effectively left the European Commission and finance ministers a single weekend to change the way the European Union operates its finances.
Ms. Merkel of Germany attended a victory parade on Red Square in Moscow on Sunday, a sign of how seriously Germans consider reconciliation with Russia. Mr. Sarkozy and the Italian prime minister, Silvio Berlusconi, opted not to attend, regarding the financial crisis as more urgent.
Mr. Sarkozy held a strategy meeting with key ministers on Sunday.
“At stake is the euro and the euro zone,” a French official said. “We need to give a clear signal to markets.” He declined to be identified because talks among the finance ministers were continuing.As a larger European rescue was being debated, the International Monetary Fund’s executive board took the expected step of approving the fund’s $38 billion loan to Greece. And as officials said that the loan would take care of Greece’s financing needs through 2012 they acknowledged that market turmoil had persisted in spite of the Greece plan.
“It’s clear from the developments of the past few days that there is broader stress in the financial markets beyond Greece,” said John P. Lipsky, the fund’s first deputy managing director.
In response to questions about aiding other troubled economies in Europe, Mr. Lipsky emphasized, “There are no program negotiations at this time with either Portugal or Spain.”
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