Meeting of Finance Ministers of Euro zone

Commissioner Joaquin Almunia of the European Monetary Affairs said that they had a successful friendly dialogue with the Eurogroup ministers and made a compromise.

Chairman Jean-Claude Juncker of Eurogroup

The set back in the world economy had an effect on Eurogroup. The economy was surprisingly observed to be tightening since the beginning of summer and growth is expected to stay low. Regardless of the situation there are a few reasons to be glad about like the drop of oil prices and some commodities.

A few principles have been established. To ascertain a common response is better than a bungling national response when confronted with distress that affects every economy. Thinking of a pact that has rules on allowing flexibility called the Stability and Growth Pact. Leave the automatic stabilizers to operate when facing a set back.

Even if the economic hold up is very severe, Juncker do not believe that this will be a period of long-stretched recession.

Finance Minister Peer Steinbrueck of Germany

Apparently the discussions of European finance ministers will be in connection with the reports coming in almost weekly from the US on financial markets. The costs on the existing financial market turmoil are quite significant. It is necessary to make certain that the agreed preventive measures are instigated.

The discussions will be about Europe’s economic situation, specifically the price increases brought about by energy prices.

Improving German competitiveness is the key to the rising energy prices. The less dependency on energy imports will be achieved if there are improved energy efficiencies, changes in energy consumption and process and product changes. A European economic stimulus program is not a solution in Germany but will just be a waste of money.

The effects of VAT and reduced VAT on employment or state budgets needs consensus. Steinbrueck do not agree with the proposals by the Commission of a Reduced VAT.

The banks that had nothing to be concerned of are insisting on stricter bank regulation rules but when talks of transparency, code of conduct and set of best practices were in progress, they looked a bit doubtful. Then there was a financial markets crisis five months later. The politicians were asked by the heads of big institutions including the Americans to lay down a framework and set up ground rules.

The effect of the problems at Freddie Mac and Fannie Mae on global investors depends on the number of investors outside America to hold securities with them. This could be a problem for countries in Asia but not mainly a European problem.

Minister Christine Lagarde, ECOFIN Chair and French Economy Minister

The observed French inflation at the beginning of June is finally over. Europe is not in recession the forecasts are for growth.