Earlier this week I wrote about the upcoming EU leaders’ meeting which was held yesterday. I wrote about how the market fully anticipated some collective action by the EU countries to help Greece deal with its fiscal problems and potential risk of defaulting on its loans. Hopes rose even higher when it became known that the European Central Bank’s president Jean-Claude Trichet will also attend this leaders’ meeting. This was seen as a clear signal that firm financial action will be taken on the Greek matter.
This hope worked in the Euro’s favor throughout the week, causing it to rebound after a drawn out slump. But yesterday, once the EU official statement came out, the Euro dropped again, virtually obliterating all of the gains it had achieved earlier this week.
EU President Herman Van Rompuy stated that the EU was determined to help Greece out, but there was no word about specific action that was to be taken. As it would seem so far, what the EU members offered Greece were words of encouragement, some political hazy promises, and talk about how they will continue to monitor the situation in March. There was no talk of being mutually obligated to help Greece pay back its loans.
Is there any wonder the Euro fell? What can investors deduce from this: the EU wants to do nothing about Greece. The stronger countries hope to be able to get things under control without lending a hand. This makes the Euro seems very shaky, indeed.
Other news
Other news from Europe were also bad for the Euro: The Euro bloc grew by just 0.1% in the final quarter of 2009, while Spain and Greece actually shrank. The Growth in Germany, which is counted on as a powerful force for European recovery, seems to have stalled as well. All this, on top of the Greek situation seems very negative for the Euro indeed.
