G7 leaders planned a conference call Tuesday ahead of a scheduled mid-June summit meeting to discuss the eurozone debt crisis, after a weekend warning by billionaire George Soros that Europe had just three months to salvage the euro. Spain finally called for outside funding, saying that ever-rising interest rates are shutting the door to world markets. Adding to the gloom, manufacturing and services output declined for the fourth month in a row in a purchasing managers' survey.
Bloomberg reported Tuesday that finance ministers and central bank governors from the G7 countries intended to talk about the ongoing crisis, with Finance Minister Jun Azumi of Japan quoted saying they were "concerned about the unstable situation in the current global economy and we need to share these concerns." The call comes before a G20 summit meeting set for June 18-19.
Market concerns have been rising over a possible Greek exit from the euro and pending fallout from the Spanish banking crisis. Eurozone leaders have been unable to come to any agreement on actions that could resolve the situation, with Germany opposing closer financial ties with eurozone members such as joint euro area bonds.
However, Chancellor Angela Merkel of Germany said on Monday night that systemic banks might need supervision at the European level, and on Tuesday Wolfgang Schaeuble, Germany's finance minister, added that the country was open to closer European coordination to resolve the crisis.
In remarks before a meeting with European Commission (EC) head Jose Barroso, Merkel said that ratification of the new fiscal pact, which makes debt and deficit limits binding on member countries, "is one step, but it's not yet sufficient. So we will also talk about to what degree one has to bring the systemic banks under specific European supervision to keep national interests from playing too large a role."
The billionaire George Soros (left) had said over the weekend that Europe has but three months to resolve the crisis and save the euro, saying in an AFP report, "In my judgment, the authorities have a three months' window during which they could correct their mistakes and reverse the current trends." He was specifically critical of Germany's role, and that of the Bundesbank, in the current impasse—as well as Germany's stance on austerity as other nations swing toward growth.
He was quoted saying, "In a crisis, the creditors are in the driver's seat and nothing can be done without German support," adding that public opposition to austerity in the eurozone "is likely to grow until the policy is reversed."
