Fitch Ratings sees no quick fix to the euro zone crisis ahead of a crucial meeting of European leaders in Brussels on Wednesday and amid worrying signs that a European recession will set in this winter.
“There is no quick fix, no matter what comes from the summit on Wednesday,” said Tony Stringer, Fitch΄s global head of sovereign ratings by teleconference.
European leaders are considering a plan to make the euro zone΄s 440 billion euro bailout fund effectively larger by employing leverage to effectively deal with the crisis. Options for the fund, the European Financial Stability Facility, have been narrowed to include an insurance plan that foresees the fund΄s setting aside a pool of money that could be used to offset part of any losses suffered by purchasers of the debt of weak countries, such as Italy.
Fitch΄s Stringer said he regarded Greece as insolvent and that a default for that country is inevitable, with the outlook for Spain and Italy a concern.
In terms of Asia, the ratings agency expects strong growth for the region in 2012, but is worried about the current state of the banking system in China. It puts the chance of a Chinese banking crisis in the coming years at a 50% chance.
(source: Dow Jones)
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