Photo: Ibrahim lujaz on Flickr
Everyone’s still watching Europe right now, with traders jumping to react to each new announcement or rumour — important or not.With the EFSF still in flux, Trichet stepping down this month, and Greek protests turning violent in Athens, the crisis could be escalating once again.
Here’s what’s going on right now:
– Whispers about bank recapitalization have been bolstering markets this week, and a coordinated European plan to do just that is looking more and more likely. EU economic minister Olli Rehn was the first to talk about that, German Chancellor Angela Merkel is talking about that too, and now European Commission head Jose Manuel Barroso.
– A renegade party in Slovakia’s coalition said it might now have reached a workable plan to pass the EFSF expansion bill, just hours after their leader said that hope was slim for a compromise (via Reuters).
– European Central Bank President Jean-Claude Trichet is preparing to step down from his post and made his final policy rate announcement today. The ECB left rates unchanged but restarted a covered bond purchase program and started tong-term refinancing operations for banks. (Here is our full coverage of his press conference.) Nothing huge — and certainly not the rate cut people were praying for — but that could restore a little confidence in the banking sector.
– The IMF will complete its review of Greece’s finances in a few days, according to ForexTV. The country’s leaders are praying it will get $11 billion in EU/ECB/IMF troika aid. Earlier this week, Jean-Claude Juncker announced that it probably would not receive this aid until next month, reneging on earlier statements that it would see the aid by the middle of October.
– That troika aid could still be in jeopardy, however, despite EU leaders assurances that it will be doled out. Greece recently announced it would miss its deficit-reduction goals. But if the EFSF gets passed before Greece sees a disorderly default, does that even matter?