A well-connected writer for the Telegraph, Ambrose Evans-Pritchard, reported the following European proposals are being pushed this week:
The eurozone's "Latin Bloc" is in full revolt. The trio of French, Italian and Spanish leaders - backed by world powers - are to push for a radical shift in Europe's economic strategy at a crucial summit on Wednesday. The package of measures includes an EMU-wide guarantee of bank deposits aimed at halting a slow bank run across southern Europe, as well as demands for full activation of the European Central Bank as a lender of last resort. They will propose eurobonds to finance an infrastructure blitz, a sort of Marshall Plan to revive confidence even if long-term benefits will take years to feed through.
Mr Hollande is balking at the coronation of German finance minister Wolfgang Schaeuble. "It is a litmus test. Hollande is flexing his muscles, showing that he is willing block the man seen as Europe's symbol of austerity," said Mats Persson from Open Europe. "The real battle is over the ECB. It is the only body that can act swiftly enough to underwrite the bond markets. But the crisis may have to get far worse before the Germans yield. It will take immediate contagion, far beyond Greece."
Obviously, adoption of any of these proposals would be positive for U.S. stocks (SPY), and foreign stocks (EFA). The impact on the euro (FXE) could be mixed since additional money printing for the ECB is a doubled-edged sword helping keep the EU together, but possibly hatching the seeds for future inflation. The entire article is worth a look.
An Associated Press article threw some cold water on the idea of jointly-issued European debt:
Germany is making clear ahead of a European Union summit that Chancellor Angela Merkel's government remains staunchly opposed to the idea of jointly issued bonds for the 17-nation eurozone.
