ECB Holds Key to European Debt Fix

 

Just weeks after EU finance ministers signed off on an unprecedented bailout of Spanish banks, Madrid’s borrowing costs have soared over concerns that the country’s deepening recession may force a Greek-style bailout. The most recent problems in Spain are just part of a series of developments in Europe that have investors wondering when the next shoe will drop. “What I think I see investors doing, quite understandably, is tending to think that there will be either a dramatic break up or a dramatic solution,” Credit Suisse’s Chief Global Strategist Jonathan Wilmot said at a recent meeting of the bank’s research institute in London. However, Wilmot thinks investors will be disappointed, and Europe will continue to waiver, resulting in continued uncertainty. Moreover, any relief that does come will likely be the product of the European Central Bank and not EU governments, which have demonstrated their repeated inability to provide a timely solution to Europe’s debt crisis.