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EU leaders meet Europe's dysfunctional family holds its reunion today. The question is whether at the end of the gathering it will be celebrating a rebirth or mourning a death.
Already, markets are filled with rumour, speculation and various reports, though German Chancellor Angela Merkel made a passionate plea to her Bundestag today in defence of the euro zone, spelling out the crucial nature of today's summit in Brussels.
And Italy's Prime Minister Silvio Berlusconi managed to save his government from collapsing, as The Globe and Mail's Eric Reguly reports, though there was an actual fist fight in Parliament.
Reuters reports that the deputies from the governing coalition got into it with some from the opposition, at least two of them grabbing each other by the throat. This apparently was started by a comment on TV by the speaker of the opposition party about the wife of the leader of the Northern League party. (They take "at each other's throat" literally in Italy's parliament.)
Today's meeting is billed as a make-it-or-break-it moment, and the tense leaders of the 17-member monetary union are under intense pressure by other governments to settle the debt crisis with a Grand Plan once and for all given the potential to derail the global recovery.
Of course, Ms. Merkel and her ally, France's Nicolas Sarkozy, set the bar extremely high for the summit, saying there would be a plan. It has been two years since this crisis began, and Europe's leaders have been slammed for letting it heighten and spread.
"Needless to say, all eyes are on the EU summit and it is unclear whether we get full disclosure or if the details will be left for another day," said Sue Trinh, senior currency strategist at RBC in Hong Kong.
Observers are already taking a dim view, noting that the cancellation of what was to have been a pre-summit meeting of EU finance chiefs does not bode well.
"Yesterday's sudden cancellation of the finance ministers meeting doesn't generate confidence that EU leaders have a coherent plan to deal with the debt crisis, and the pathetic reasons for the cancellation, saying there wasn't really a definite meeting scheduled in the first place, only serve to reinforce this perception," said CMC Markets analyst Michael Hewson.
Added to that is the fact that Ms. Merkel, the main player at the table, gave no details or figures in her pre-summit speech today, when she noted that the debt troubles make for Europe's most serious crisis since the Second World War. (To which Mr. Hewson remarked: "If Merkel feels she has to use the war card methinks she's losing the argument.)
Under discussion is a three-pronged plan that would boost the heft of the euro zone's bailout fund, known as the EFSF, to somewhere around €1-trillion, recapitalize the region's banks to the tune of more than €100-billion, and arrange a "haircut" of between 40 per cent and 60 per cent (or more?) for holders of Greek debt.
The Bundestag voted today to approve the EFSF plan.
A draft statement on one aspect, obtained by The Wall Street Journal, says banks should have a capital ratio of 9 per cent by June 30, 2012, and that financial institutions should first try to find private sources for that, via restructuring and debt-to-equity vehicles. Dividends and bonuses should be delayed to meet that target, and, only if necessary, should they tap governments or borrow from the bailout fund.
The main concern is the extent to which private debtholders, primarily banks, will take a hit.
"This could remain a sticking point with banks reluctant to take more than a 40-per-cent hit while the IMF, and EU leaders insistent on a much bigger haircut. This impasse could well delay the second Greek bailout, and we may well find that some parts of any agreement could get kicked down to G20 at Cannes next week."
As it stands now, Ms. Merkel's speech has set the stage and lowered expectations.
"With guidance from German Chancellor Angela Merkel that both EFSF leverage options will be discussed at today's EU Summit, it is clear that no agreement with firm details is in place as yet," said Derek Holt and Karen Cordes Woods of Scotia Capital.
"That's partly because an EFSF leverage proposal requires agreement on the size of a Greek aid package including markdown targets before understanding what is left to leverage. What bolsters lowered expectations for today were Merkel's comments during an early morning speech delivered before the Bundestag that more measures will be needed following today, and more IMF crisis financing may be required."
- 'The world is watching': Merkel
- Audio: Eric Reguly on Europe's 'moment of truth'
- Last-minute deal breaks stalemate threatening Berlusconi government
- Accord at EU summit in doubt: official
- Unresolved debt crisis sets off political shock waves
RIM delays system launch Research In Motion Ltd. has has delayed the launch of an updated operating system for its PlayBook tablet until February 2012, marking yet one more setback in the company's efforts to come out with a viable alternative to the ipad from Apple Inc. , The Globe and Mail's Iain Marlow writes today.
Many have been looking forward to the updated PlayBook OS 2.0 because it was expected to include the native e-mail application and other features that were notably missing when the PlayBook launched, contributing in part to the device's negative reviews and its lack of traction in the marketplace.
Rogers profit jumps Rogers Communications Inc. today posted a better-than-expected third-quarter profit but relatively weak wireless growth, highlighting the struggle of Canada's largest wireless company through one of the toughest competitive environments it has ever faced.
Rogers earned $485-million or 89 cents a share in adjusted net income in the usually lucrative back-to-school quarter, compared to $479-million or 83 cents per share in the same quarter last year, The Globe and Mail's Iain Marlow reports. Analysts had expected adjusted earnings per share of 82 cents.
The company also announced the retirement of its chief financial officer Bill Linton, who will be replaced by Anthony Staffieri, who joins the company from rival BCE Inc. Mr. Linton will remain with Rogers until the end of 2012, the company said.
Ford profit dips Ford Motor Co. posted a slightly lower third-quarter profit today but it's still on a roll.
The auto maker, alone among the Detroit Three in not needing a recession-era bailout, earned $1.65-billion or 41 cents a share, compared to $1.7-billion or 43 cents a year earlier. Revenue climbed 14 per cent to $33.1-billion.
"We remain well on track to deliver improved full year pre-tax operating profit and automotive operating-related cash flow, consistent with our guidance," CFO Lewis Booth said in a statement. "Our liquidity remains strong, and we will continue to take actions when appropriate to strengthen our balance sheet."
Delaying retirement Canadians are delaying their retirement and staying on the job for longer, a trend that had profound implications for the country's current and future work force, The Globe and Mail's Tavia Grant reports.
A 50-year-old worker in 2008 stayed in the labour force three and a half years longer than in the mid-1990s, according to a Statistics Canada indicator that tracks peoples' retirement behaviour.
Markets await Carney Bank of Canada Governor Mark Carney is in the spotlight again this morning, with a report and news conference that wil add details to yesterday gloomy outlook.
Yesterday, the central bank held its benchmark rate steady at 1 per cent, but marked down its forecasts for economic growth this year and next.
Today, the central bank releases its Monetary Policy Report at 10:30 a.m., and Mr. Carney meets reports a short time later. The Globe and Mail's Jeremy Torobin will report on the MPR.
While today's report isn't expected to surprise markets, it will flesh out what the central bank is thinking.
"What we'll be watching for will be more meat surrounding the details," said Scotia Capital's Mr. Holt and Ms. Woods.
"That includes annual revisions to the BoC's assumption on productivity and potential growth as an input into its sharply revised output gap expectations that don't see space capacity closing off until the end of 2013," they said in a research note.
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The European Central Bank alone has the power to quell the euro zone crisis. Its new chief, Mario Draghi, must choose between two paths: the orthodox one leads towards failure; the unorthodox one should lead towards success. Martin Wolf of The Financial Times writes an open letter to Mr. Draghi.
Missed amidst the endless news flow on the euro crisis, the European parliament has been quietly working toward obtaining a ground-breaking set of new powers, Constantin Gurdgiev writes.
By sharing your goals, your history and your struggles at work, the effect that you can have on those around you will be magnified, Glenn Llopis of Forbes.com writes.
From today's Report on Business