Did Sarkozy Get China to Become the EU’s Lender of Last Resort?
Hours after the euro-region summit ended, French (NYSE:EWQ) President Nicolas Sarkozy spoke to his Chinese (NYSE:FXI) counterpart Hu Jintao in an effort to mobilize support for the massive rescue fund hammered out during the summit. The summit ended with an agreement to boost the European Financial Stability Facility to about $1.4 trillion — but it will take a village to raise this fund.
According to reports by the state-owned China Central Television, Hu hopes the measures will help to stabilize markets. “The Europeans have their back against the wall and China is the lender of last resort,” Patrick Bennett, a strategist at Canadian Imperial Bank of Commerce in Hong Kong. According to the statement issued by the French president’s office, Sarkozy and Hu “agreed to cooperate closely to ensure the G20 can make a decisive contribution to ensure growth and global stability.”
Japan (NYSE:EWJ) is also waiting in the wings to help. Apparently, the globalized economy is heavily interdependent and every major country is held equally hostage to Europe’s needs.