Economy World

Europe’s debt crisis could last two years

Paris – The German Minister of Finance estimated yesterday that the debt crisis could still take up to two years in Europe.

“I think within 12 to 24 months, we will experience a calming of financial markets,” said Wolfgang Schäuble on Europe-1, according to simultaneous translation performed by the radio.

Asked on Europe-1 in Aix-la-Chapelle, on the eve of the beginning of the G8 summit in the U.S., the minister said it was crucial that the leaders of industrialized countries respond more quickly to stem the crisis that threatens economic recovery worldwide.

“During the G8, it is very important to see that Europeans develop common positions more quickly, I think in the last years we had not been good enough,” said Schäuble.

European shares stood yesterday, torn between hopes for the G8 summit at Camp David to provide answers to the crisis in the eurozone and fears growing of a sharp exit from Greece. “Government leaders could pave the way for negotiations between the central bank governors,” the analysts felt the Crédit Mutuel-CIC, before discussing the scenario of a “joint action or coordination of actions.”

Despite the warning shot of rating agencies against Greece and Spain, European stock markets have not panicked: the Paris Bourse has sold 0.1%, the Frankfurt 0, 6%, 0.3%, while Milan Madrid has offered a 0.4% increase. London fell by 1.3%. “The rating agencies have a habit of this kind of ads. They do not surprise the market and more it is clear that there is no panic effect, “noted Yves Marcais, seller of shares in Global Equities.

Thursday, the ax had fallen agencies after the market close in Europe: Fitch downgraded one notch the long-term rating of the sovereign debt of Greece, CCC, and Moody’s has sanctioned 16 banks and four Spanish regions.

If the rating agency announcements spared the European markets, Asian stock markets have made charges, diving for some of some 3% late in the session, such as Tokyo (-3%) and Seoul (-3.4%). Wall Street was febrile, attending turbulent stock market debut of the champion of social networks Facebook.

Specter of bankruptcy of Greece, rumors of massive withdrawals in banks in Spain and Greece, targets of degradation by the rating agencies … tensions remained strong in the euro area.

A spokesman for the German Ministry of Finance reassured yesterday on the situation in Spain, declaring that there was “currently no reason to doubt” the ability to Madrid to help its banks without resorting to the relief fund Europe EFSF.

While the possibility of an outflow of Greece in the euro area is being considered more and more openly in recent weeks, Fitch found that there was an “increased risk that Greece is not able to maintain its participation the Economic and Monetary Union. ” Maintaining the country within the euro area is compromised by the rise of anti-austerity parties that could come to power after the next general election planned on June 17.

European institutions already studying “scenarios” of failure of Greece, revealed yesterday the EU trade commissioner, Karel De Gucht, creating a focus of his colleague Olli Rehn, who has denied any scenario where output of the euro in Greece.

The German finance minister, Wolfgang Schäuble, yesterday reiterated its call for Greece to remain in the euro area. And German Chancellor Angela Merkel said she hoped to have a government “capable of acting in Greece” after the elections, during a telephone conversation with the head of the Greek state, Karolos Papoulias.

This tense situation penalizes the euro, investors preferring the values ​​deemed safer as the yen or the dollar. After falling to its lowest level in four months against the dollar yesterday morning, the euro has gained ground, however, worth 1.2719 dollars. Rate 10-year German Bund, value safe haven in times of crisis, flying at an historic low, below 1.4% for the first time since the creation of the euro area.

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