SUMMIT NEEDS TO TAKE STRONG ACTION ON BANK RECAPITALISATION - The euro is lower this morning, hit by concerns about whether European leaders will take aggressive steps at a summit this weekend to ease the euro zone's debt crisis. This comes as European policymakers struggle to reach consensus on measures to contain the crisis. French President Nicolas Sarkozy said last evening that plans to tackle the euro zone debt crisis have stalled, with Paris and Berlin at odds over how to increase the firepower of the region's bail-out fund.
Tim Ohlenberg, a senior economist at the Centre for Economics and Business Research in London, says the most critical thing needed at Sunday's summit is reaching agreement on Europe's banks. He says a lot of capital needs to be put in place to deal with the threat of sovereign defaults, especially from Greece. While it is not yet clear how many banks could be recapitalised, he says they will range from the very big to the less significant. He says the recent rescue of Dexia took people by surprise as they had thought it was stable. Mr Ohlenberg says that capital is needed at a central European level, which will provided mainly by Germany. The economist also says that the summit should look further ahead and take measures to safeguard the euro zone economy, which means safeguarding the banks.
On Ireland, Mr Ohlenberg says that he expects a good report from the Troika today. He says his research shows, overall, a very good view of the Irish economy. While the country's exports will continue to remain strong, he predicts they will be hit by the slowdown in the world economy and the crisis caused the euro zone debt problems.
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MORNING BRIEFS - The latest quarterly assessment of Ireland's EU/IMF package from international lenders will show the country is meeting all of the targets set so far under the €85 billion deal. According to Finance Minister Michael Noonan, the Troika's report will show that Ireland has achieved a satisfactory result. Officials from the lenders - the European Union, the International Monetary Fund and the European Central Bank - who arrived in Dublin last week, will announce the results of its latest review this afternoon. Ireland has so far passed each of its quarterly reviews since the agreement was struck last November.
*** A Boston court ruled yesterday that David Drumm is not entitled to any of the proceeds of the sale of the house he bought in Cape Cod after he resigned as chief executive of Anglo Irish Bank. Mr Drumm, who has filed for bankruptcy, had claimed that this was his main residence, which would have entitled him to receive $500,000 from the proceeds. Mr Drumm appealed to the court in an emergency motion to try to stop a recent decision that denies him the money from the sale of the house he owned in Chatham in Cape Cod. The judge had ruled that he was not entitled to claim that house as his main residence, and the $4m from the sale would go to settle his bankruptcy debts, primarily with his old employer, Anglo Irish Bank.
*** On the currency markets, the euro is trading at $1.37 and 87 pence sterling.
