Europe's debt is so precarious that we Americans - SURPRISE -
must make a greater personal sacrifice to save the world. And
you thought it was to benefit the bankers!
BRUSSELS/WASHINGTON |
(Reuters) - Treasury Secretary Timothy Geithner makes a one-day trip to Poland this week for an unprecedented meeting with euro zone finance ministers as growing fears of a potential Greek debt default rip into Europe's banking sector.
The trip comes as a surprise since Geithner returned only on Saturday from a meeting of Group of Seven finance ministers in Marseilles, France, where he said Europe's strongest economies must offer "unequivocal" backing to the weakest.
Geithner is expected to attend the euro zone meeting on Friday and then return to Washington. The Treasury said on Monday only that he will discuss efforts to boost global recovery and cooperate on financial regulation, but U.S. attention is focused on risks posed by potential European debt contagion.
The danger that a Greek debt default could roil bigger European economies was underlined on Monday as heavily exposed French banks' shares plunged and investor confidence in the euro zone's ability to surmount a sovereign debt crisis ebbed.
Underscoring concerns by the United States about the global economic dangers from Europe's debt troubles, the Treasury Department said Geithner would meet with International Monetary Fund chief Christine Lagarde on Tuesday.
Geithner's trip to Europe marks the first time a U.S. Treasury secretary will attend a meeting of euro zone finance ministers. But it is not the first time he has tried to push Europe into acting more decisively to cope with its debts.
In March, he made a quick one-day trip to Germany just days ahead of a Europe Union summit to meet his counterpart, Wolfgang Schaeuble, and to urge European countries to step up their efforts to handle the crisis.
He held a one-on-one session with Schaeuble again in Marseilles on Friday, but neither side would talk about what was discussed in that session.
On Monday, shares in Societe Generale, BNP Paribas and Credit Agricole slumped more than 10 percent amid expectations of an imminent downgrade by credit ratings agency Moody's due to their exposure to Greek bonds.
The surprise resignation of European Central Bank Chief Economist Juergen Stark on Friday and weekend comments by German politicians suggesting Athens may have to default and be "suspended" from the euro zone drove the euro to a 10-year low against the yen and a seven-month low against the dollar, though it later recovered some ground.
"Europe is not just lurching from one crisis to another. It is lurching into a new one before the previous one is solved," said Makoto Noji, senior strategist at SMBC Nikko Securities.
The storm on Monday forced SocGen, the hardest-hit French lender in recent weeks, to announce further drastic measures it denied only last week were under consideration, speeding up asset disposals and deepening cost cuts to free up 4 billion euros in fresh capital.
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