Watch out every investor has started eyeing Brussels as the dates are closer June 28-29 as they worried about an economic slowdown in the U.S. and China were preparing for the European leaders to disappoint at the EU summit.

There was anxiety on Monday Spain escalated,when the country formally asked other euro countries for rescue loans for its banks, which are reeling from the collapse of the country’s real estate sector.

The amount and terms will be agreed on July 9. Two international audits have estimated that Spain’s banks could need up to €62 billion ($77.7 billion)

Its official Cyprus is in Junk status after downgraded by Fitch. So the contagion in my earlier post is not under control and it is spreading faster in Europe.

There has been suggestions made to solve the problems even in G20 like the euro zone’s rescue funds should be used to buy the bonds of governments which, like Spain’s, are under attack. The European Stability Mechanism and its forerunner, the European Financial Stability Facility, can exploit a special contingency to spend hundreds of billions of euros trying to put a ceiling on borrowing costs.

That sparked some market rally but for how long ? Germany, the euro-zone economy that counts, has not signed up to the plan. Even if it does, the funds would be barely enough to save Spain, to say nothing of Italy, which has €2 trillion of sovereign debt. The inadequacy of the funds available risks being seen as a signal that there are limits to the euro zone’s commitments—in other words, an invitation for investors to flee.

I have quoted again and again, The Crisis in theory is manageable. In practice it is hard to see how the euro zone’s leaders can reconcile the months of political wrangling ahead with investors’ tendency to flight.

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