setUoYouRPROFILE's blog: "tufui"

Angela Merkel and Nicolas Sarkozy, racing to stamp out the euro debt crisis threatening to engulf the financial system, gave themselves three weeks to devise a plan to recapitalize banks, get Greece on the right track and fix Europe’s economic governance. “By the end of the month,burberry outlet cheap we will have responded to the crisis issue and to the vision issue,” the French president said in Berlin yesterday at a joint briefing with the German chancellor before they dined at her office. Under increasing pressure to defuse turmoil that has raged for 18 months and facing growing concern that Greece is headed to default, Merkel said European leaders will do “everything necessary” to ensure that banks have enough capital. Sarkozy said they would deliver a plan by the Nov. 3 Group of 20 summit. “Maybe they’re still running one step behind, but they are at least discussing the right things,” Carsten Brzeski, an economist at ING Group in Brussels, said in a phone interview. Underscoring the urgency, the board of French-Belgian Dexia SA (DEXB) met yesterday to begin dismantling the lender, the first victim of the debt crisis at the core of Europe. While the heads of Europe’s two biggest economies reiterated their intention to keep Greece in the euro, they left it to international auditors, known as the “troika,” to guide the next steps. Sarkozy avoided the line he used 10 days ago that “we can’t let Greece fail.” The focus on Europe’s banks and the search for what each called a “durable” solution for Greece signal a willingness to accept a debt restructuring there, an outcome Sarkozy has resisted. Investors may be pushed to take a bigger share of the losses, effectively spiking a debt swap that was part of a July 21 bailout that would impose a 21 percent writeoff. “This in my opinion kills the July deal for sure and sets up a more credible and deeper Greek debt restructuring,” Jacob Kirkegaard of the Peterson Institute for International Economics in Washington, said in an e-mail. After their eighth bilateral summit in 20 months, the two leaders unveiled no new agreement on what role should be played by the bailout fund, the European Financial Stability Facility, amid reports that they differed on how to use it. “We will recapitalize the banks,” Sarkozy said. “We’ll do it in complete agreement with our German friends because the economy needs it, to assure growth and financing.” European banks need as much as 200 billion euros $268 billion) of capital, Antonio Borges, the International Monetary Fund’s European department head, said last week.