Draghi said it would be "helpful for the overall stance of policy" if fiscal policy could play a greater role alongside the ECB's monetary policy.» Read More
In any murder mystery film, it pays to watch the boring gray man (or woman) in the corner; quiet, unobtrusive characters can be deadly. So, too, in finance. Four years ago, the giant US money market funds seemed some of the dullest actors in the global financial scene. But in 2007, they quietly helped to spark the crisis in the mortgage-backed securities world.
Chris Wheeler, bank analyst at Mediobanca joined CNBC to discuss the latest news on the European markets and what would happen if the Greek bailout fails.
"Greece has most definitely been cut loose by the markets, the question is whether it will now be cut loose by the politicians," Steve Barrow, head of G10 research at Standard Bank, told CNBC.
Barclays is comfortable with its exposure to Europe and now has more cash on its balance sheet than before the 2008 financial crisis, CEO Robert Diamond told CNBC Wednesday.
Banks are in no better shape than they were in March 2008, Riccardo Ronco, technical analyst at Aviate Global, told CNBC. He suggested they still faced severe funding problems and that "things will get worse before they get better".
"True European fiscal union is something we will probably not see for another ten or twenty years," Alan Capper, head of credit strategy at Lloyds Banking Group told CNBC. He added that some countries within Europe were dealing with "generation long" economic problems and that some members of the Euro zone would have to get used to a long period of low or no growth and markets should price for the risk accordingly.
The idea that Paulson needed a crisis in order to solve a bigger crisis could be seen by some as a post-game rationalization by the former official, but it raises some interesting questions for German Chancellor Angela Merkel and Europe's ongoing sovereign debt crisis.
"In terms of global competitiveness what you see is the US has gained leaps and bounds versus Europe. Now, clearly emerging markets are still very competitive on an absolute cost and wage basis, they are still the leaders. However, once you add logistic costs and other associated costs the US is still very competitive at this point," Virginie Maisonneuve, head of multi-regional equities at Schroders. "You are seeing companies like Volkswagen going into places like Tennessee and getting cost on an hourly basis of $17 to $18 an hour, remember the likes of GM were firing at a cost of around $90 an hour so very much competitive."
Simon Maughan, head of sales & distribution at MF Global joined CNBC to discuss the German economic figures and market reaction. He added the expected the European Central Bank would be forced into some form of quantitative easing to support the Euro.
On July 21, EU leaders agreed to a second bailout for Greece, one that was supposed to draw a line under the euro zone debt crisis and give the new government in Athens a chance come to grips with the huge debts it inherited when it was elected. One month later, and the situation appears to be getting worse rather than better, according to Simon Derrick, the head of currency research at Bank of New York Mellon.
"I think the German PMI announcement will have an impact on spread widening, because investors will see it as an indication that the world is slowing, Germany is slowing, and in general, risk is increasing," Adrian Schmidt, FX strategist at Lloyds Bank Corporate Markets, told CNBC.
Predictablity on the global political stage is failing to allay market uncertainty, says Vince Farrell.
Insight on how the euro can find stability again, with Frank Engels, Barclays Capital co-head European economics.
European leaders are being pushed into closer fiscal union sooner than they had anticipated by volatile markets concerned over a dearth of ideas on how to solve the sovereign debt crisis in the euro zone, analysts and investors told CNBC.
Euro bonds are exactly the “wrong answer” to the current crisis and would merely lead the euro zone to a "debt union" rather than a “stability union” according to German Chancellor Angela Merkel.
Europe’s economic and monetary union as constructed does not work and the euro zone needs some collective and determined leadership according to Jim O’Neill, the chairman of Goldman Sachs Asset Management.
The week's top business news and investment advice, including how to trade Europe, US financials, HP's sharp drop and the run-up in gold.
"The terror in Europe stopped, amid rumors there might be weekend meetings and things getting solved," Art Cashin said. "Europe is going to continue to drive this bus and we should be worried about any new things there."
"What will be interesting to see from this week's meeting will be the new scenario for the French economy. We know from the figures we had ten days ago that the growth figures were zero in the second quarter, so we know growth for the year will be between 1.5 percent and 1.7 percent, which is below the 2 percent which was expected by the government at the beginning of the year," Philippe Waechter, head of economic research at Natixis Asset Management, told CNBC's Investing Edge. "We don't know the measures that will be presented [to reduce the budget deficit], but we will start to have some new ways to think about it," he added.
The US and European Union pose divergent threats to a global economic recovery and despite weak growth in the United States, the euro zone debt crisis is more likely to impede a recovery, Paul Donovan, deputy head of Global Economics told CNBC.