This weekend, finance ministers from the “Group of 20” (Argentina, Australia, Brazil, Canada, China, European Union, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, U.K. and the U.S., along with the International Monetary Fund and the World Bank) met in Paris to discuss the Eurozone financial crisis. A statement released from the meeting suggested that on October 23 the European Union will "decisively address the current challenges through a comprehensive plan”.
MY TAKE: While optimism has recently increased about a positive outcome, fundamental issues presenting significant headwinds include 1) high unemployment, 2) tightening financial conditions, 3) high debt levels and 4) a broad Eurozone economic slowdown. After a two year process of underestimating Eurozone problems, European leaders seem stuck in a “we have a plan for a plan” mode. Separately, the U.S Congress seems to be in its own “working on a plan for a plan” mode with its “Supercommittee” addressing significant federal government budget issues. Let’s not become too optimistic.