G20 ministers to discuss Europe’s financial crisis

Finance ministers from the Group of 20 will discuss the European debt crisis today, Canadian Finance Minister Jim Flaherty said. Asked whether the crisis was an issue for the G20, Flaherty said: “I’ve been having discussions and I will have more discussions tomorrow morning, and subsequently with my G7 colleagues.” He added: “Those discussions also take place with some of the nonEuropean members of the G20 ... who are concerned around the world outside of the euro zone with the potential consequences of a crisis in the euro zone, particularly a banking crisis.” Flaherty did not provide details about which colleagues he was speaking to and what the result of the talks might be. Leaders of the G20 advanced and emerging economies will meet in Mexico June 18-19 and Europe is likely to dominate the agenda. Yesterday, financial markets were rattled by the deepening problems in the euro zone, as well as by disappointing US jobs data and weak Chinese manufacturing figures, all of which spurred more concern about the global growth outlook. Flaherty said Canada’s economy was in relatively good shape compared with other industrialized nations, although he noted that employment data has been “a bit bumpy” in recent months, and that Canada could be hit by Europe’s troubles. “The real concern right now is Europe of course - the weakness in some of the banks in Europe, the fact they’re undercapitalized, the fact the other European countries in the euro zone have not taken sufficient action yet to address those issues of undercapitalization of banks and building an adequate firewall,” he said. “So this is a continuing concern.” Amid global pressure to end euro zone turmoil rocking financial markets and creating deep economic uncertainty, billionaire investor George Soros said Europe has three months to save the euro, “In my judgment, the authorities have a three months’ window during which they could correct their mistakes and reverse the current trends,” Soros said at an economics festival in Trento, Italy, naming those authorities as Germany and the Bundesbank. “In a crisis, the creditors are in the driver’s seat and nothing can be done without German support,” he said, noting that public opposition to austerity in the eurozone “is likely to grow until the policy is reversed.” The remarks were posted on his website. Greece is heading to the polls for a second time in six weeks after an inconclusive vote on May 6. And with the radical leftist Syriza party, chief opponent of a massive EU-IMF bailout accord, tipped to win this time, the election could lead to Greece quitting the single currency. “I expect that the Greek public will be sufficiently frightened by the prospect of expulsion from the European Union that it will give a narrow majority of seats to a coalition that is ready to abide by the current agreement,” Soros said, referring to June 17 polls in the debt-stricken state. The “crisis is liable to come to a climax in the fall” of the year, he said. “By that time the German economy will also be weakening so that Chancellor (Angela) Merkel will find it even more difficult than today to persuade the German public to accept any additional European responsibilities,” said Soros. “That is what creates a three months’ window.” Soros, a Hungarian-American investor and philanthropist, said austerity measures were having a disastrous effect on the global economy. “The authorities didn’t understand the nature of the euro crisis; they thought it is a fiscal problem while it is more of a banking problem and a problem of competitiveness,” he added. “And they applied the wrong remedy: you cannot reduce the debt burden by shrinking the economy, (but) only by growing your way out of it.” From Arab News