New World Order: Secret talks ensue on common Eurozone bond to save world from global depression

August 16, 2011 – BERLIN — German Chancellor Angela Merkel’s meeting with French President Nicolas Sarkozy today comes as investors clamor for indications that they will do more to stamp out the euro area’s debt crisis. After a July 21 European Union agreement to bolster the region’s rescue fund failed to calm markets, calls are growing for the leaders to begin discussing joint borrowing or a mutual guarantee among the 17 euro states, policies that both countries have rejected until now. While not on the agenda, the issue is likely to come up at their press briefing scheduled for 6:30 p.m. Paris time after the talks. “The key thing that can be sent by Merkel and Sarkozy is that they are now beginning to consider these things very seriously,” Myles Bradshaw, a London-based money manager at Pacific Investment Management Co., said in an Aug. 12 interview with Maryam Nemazee on Bloomberg Television. “A signal from Merkel would signal greater comfort in the market with the idea that the Germans are actually changing.” Today’s meeting in Paris was announced last week as debt concerns rattled France, the second-largest euro economy after Germany. Doubts over France’s AAA credit rating hammered shares in the country’s banks and sent the risk premium of its government bonds above Germany’s to a euro-era record as the European Central Bank began buying Spanish and Italian debt. “We’re moving toward a situation where it’s either euro bonds or bust,” said Nick Kounis, head of macroeconomic research at ABN Amro NV in Amsterdam. “We’re on the verge of extreme outcomes.” The talks between Merkel and Sarkozy will focus on proposals to tighten enforcement of EU budget rules and expand coordination of national economies, according to French Finance Minister Francois Baroin. Budget consolidation is paramount and joint bonds are not a topic for discussion, Merkel’s chief spokesman, Steffen Seibert, said yesterday, warning against expectations of a big “bang” from the meeting. “It is and remains a process,” he told reporters in Berlin. Seibert declined to say whether short-selling will be discussed after France, Spain, Italy and Belgium banned the practice from Aug. 12 to stabilize markets, a move that prompted Germany to renew calls for a “far reaching” European ban on some forms of short-selling. Unprecedented bailouts by governments totaling 365 billion euros ($522 billion) in emergency loans and ECB bond purchases have failed to stamp out the crisis. Faltering investor confidence may overcome the unwillingness of euro leaders to forge a U.S.-style fiscal union. Opponents don’t want to relinquish control of their own budgets or risk the higher borrowing costs that would result. –Bloomberg

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