January 22, 2012
European officials will push on tomorrow with a long-term plan to tackle the region’s debt crisis, as banking and government negotiators zero in on an agreement that will lighten Greece ({GDBR10)’s debt burden.
European Union finance ministers will meet in Brussels to discuss new budget rules, a financial firewall to protect indebted states and a Greek debt swap, with EU leaders racing to cobble together a firm rescue response in the coming weeks. Meanwhile, cash-strapped Greece and private bondholders said they had made progress in talks over the weekend in Athens.
As investors ignored this month’s euro-area downgrades by Standard & Poor’s and sent the single currency to its first gain in seven weeks, leaders including German Chancellor Angela Merkel are set on exploiting the momentum to lock in a final response to the two-year-old crisis.
“The most likely thing to happen is that everybody’s still in it, including Greece” at the end of the year, Jim O’Neill, chairman of Goldman Sachs Asset Management, said in a Jan. 20 interview with Charlie Rose. “The costs of exit are so unknown.”
The euro rose 2 percent to $1.2931 last week, the biggest weekly gain since Oct. 14. Spain, Greece and the euro bailout fund, the European Financial Stability Facility, sold bonds at lower rates, signaling greater demand for the assets.
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