EU ~ Important Meetings leading Up to Friday's European Summit ...

December 4, 2011

French President Nicolas Sarkozy, German Chancellor Angela Merkel, European Central Bank Chief Mario Draghi and even U.S. Treasury Secretary Timothy Geithner will star in a 5-day financial drama leading up to the summit.

Geithner will meet Tuesday in Germany with Draghi and German Finance Minister Wolfgang Schauble. On Wednesday, he travels to France for talks with Sarkozy and the prime minister-elect of Spain, Mariano Rajoy Brey. And Geithner will meet Monti in Milan just before the new Italian leader heads for the EU summit in Brussels.

The 3 important meetings in the Eurozone this week:

1. Monday, December 5th meeting Between German and French Leaders, Known now as "Merkozy" are to unveil their plan for saving the euro.

2. Thursday, December 8th European Central Bank's monetary-policy meeting.

3. Friday, December 9th is the European Union Summit - European Union leaders are expected to lay out plans to enforce stricter budget rules across the currency bloc in an effort to keep the Continent's turmoil from worsening.

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Market observers say the ECB and the EU summit are intertwined.

Investors are eager for the central bank to take a more aggressive role in buying euro-zone government debt, driving down interest rates.

But unless euro-zone countries overhaul their fiscal policies, the ECB is reluctant to expand its emergency bond-buying in a way that could lead to inflation.

The euro "will get a short-term positive reaction to policy responses, but (the summit) is not the 'be-all, end-all'" to fixing Europe's problems, said George Davis, chief technical analyst for foreign exchange at RBC Capital Markets.

Analysts say any proposals devoid of substance would be "a disaster" for the euro.

And, as Europe's crisis intensifies, economists say the potential for damage to the U.S. grows more acute. Economic data from the U.S. has defied weakness abroad, but policy makers are becoming increasingly concerned that the euro zone's contagion could soon take a toll.

Also, on Friday, Donald Kohn, a former vice chairman of the Federal Reserve, warned that U.S. banks could need more capital should Europe's problems migrate across the Atlantic.

Stay Tuned ...