Europe Given Till The End Of The Week To Fix Its Crisis Or Else…

G-20 finance ministers has called on eurozone leaders to take decisive measures by the end of week in controlling the ongoing debt crisis, or face the risk of sending the entire world economy into a downward spiral.

The October 23 European Union summit must “address the current challenges through a comprehensive plan”, said finance ministers and central bankers of the G-20 economies in a joint statement issued after their meeting ended in Paris last Saturday.

G-20 finance ministers has called on eurozone leaders to take decisive measures by the end of week in controlling the ongoing debt crisis, or face the risk of sending the entire world economy into a downward spiral.

The October 23 European Union summit must “address the current challenges through a comprehensive plan”, said finance ministers and central bankers of the G-20 economies in a joint statement issued after their meeting ended in Paris last Saturday.

[quote]”The risk of a recession would be increased dramatically were the Europeans to fail to accomplish goals that they’ve set for themselves on October 23,” added Canadian Finance Minister Jim Flaherty, as quoted by the Financial Times. [/quote]

These goals include agreeing on the losses that the private sector should take on Greece’s debt, formulating a credible plan for the recapitalisation of European banks, and implementing a system that would protect other countries from the fallout of Greece’s woes.

The Brussels meeting “has the potential to turn into a positive historic moment,” said Joachim Fels, a London-based chief economist at Morgan Stanley, as quoted by the San Francisco Chronicle. However, Fels also warned that “it could also easily turn into a negative catalyst,” if nothing fails to materialise from the summit this Sunday.

The magnitude of the summit was further emphasised by Greek Finance Minister Evangelos Venizelos, who admitted that “a lot will be decided, perhaps everything” by the end of the week.

[quote]US Treasury Secretary Timothy Geithner added that while “they (the eurozone) clearly more work to do on the strategy and the details, but when France and Germany agree on a plan together and decide to act, big things are possible.”[/quote]

During the G-20 meeting, non-Europeans finance ministers were also quick to underline the importance of the summit not just for Europe but for the rest of the world as well.

Japanese Finance Minister Jun Azumi urged Europe to “get its act together because unless the crisis is put to an end, it will start to affect emerging economies which have enjoyed strong growth.”

Adding to the pressure for the eurozone leaders was Australia’s Deputy Prime Minister and Treasurer Wayne Swan.

[quote]”The time for half-measures is over, the time for blame-shifting is over…the time for action is running out and I think the world will expect a very substantial and comprehensive package of reforms by October 23.”[/quote]

The markets seem to agree. Speaking to the Financial Times, Sony Kapoor, head of the economic consultancy Re-Define, warned that the challenge for eurozone leaders now “is not to disappoint sky-high market expectations while working under very severe financial, time and political constraints”.