Finance chiefs from the world's seven leading industrialized nations will hold a special conference call Tuesday to discuss the worsening eurozone debt crisis.
Canadian Finance Minister Jim Flaherty told reporters in Toronto Monday that the Group of Seven, or G-7, nations are concerned about debt-ridden banks within the 17-nation euro currency bloc, and the fact that European countries have “not taken sufficient action” to address the issues of the undercapitalized banks and “building an adequate firewall.”
Along with Canada, the G-7 nations include the United States, Japan, Britain, France, Italy and Germany. Tuesday's conference call is being held ahead of the G-20 summit later this month in Los Cabos, Mexico, which will bring together the world's 20 leading economies.
The euro rose slightly Tuesday in early Asian trading after falling to $1.2288 last Friday, its lowest mark in nearly two years. Also Tuesday Australia's central bank cut its interest rate by 25 basis points to 3.5 percent because of the eurozone debt crisis and slowing growth in China.
Meanwhile, Germany continues to reject Spain's call for direct European financial aid to rescue its debt-ridden banks. Spanish Prime Minister Mariano Rajoy is attempting to win approval to get $24 billion from the eurozone bailout fund to finance the government's proposed $24 billion takeover of the Bankia financial institution.
Both France and the European Commission signaled their support on Monday. But a spokesman for German Chancellor Angela Merkel said it was up to individual national governments, not banking systems, to seek bailout funds, and then to adhere to spending conditions attached to the loans.
One German investment analyst, Robert Halver of Baader Bank, said the eurozone crisis seems unending, but could be eased if the European Central Bank invested heavily in Italy and Spain to give them time to boost their economies.
“History is repeating itself, we are again in full crisis mode. Last year: crisis, this year: crisis. The politicians have learned nothing. It would be so easy though. The ECB should massively interfere (intervene) and buy time for countries like Italy and Spain so that they can pursue reforms. Nobody can bear this cacophony, this waiting, this riding out any more.”
For many in Spain, like out-of-work Madrid resident Ada Adon, finding work has proved difficult in the country with the eurozone's highest unemployment rate.
“It is really hard in Spain to get a job right now because there are no jobs, and if somewhere you might have a chance, they do not want to pay what is more or less normal. Plus, everything is so expensive: supermarkets, food…. Everything is really difficult now.”
Meanwhile, Portugal, another of Europe's debt-ridden countries, cut the projection for its economic growth to two-tenths of one percent for the coming year. Lisbon also announced that it is pumping more than $8 billion into three of the country's largest lenders to cope with increased loan losses.
