Trader Talk

Pisani: Leaders Bring Insight on Debt Crisis

Many interesting comments on the global debtcrisis this morning:

1. Treasury Secretary Timothy Geithner told CNBC at our "Delivering Alpha" conference in New York there was "not a chance" that Europe will allow their institutions fail in the way Lehman Brothers did.

2. Perhaps the most interesting commentary this morning came from Larry Fink of Blackrock, on our air, suggested that a TARP-style bailout could help Europe. Recall that the Troubled Asset Relief Program (TARP) purchased assets from U.S. financial institutions, and while controversial at the time, is generally viewed as a success. Most banks—and General Motors—have bought back their Treasury stake, others like American International Group have paid substantial portions back.

The beauty of the remark, of course, is that it attempts to deal with the European debt crisis in a much bigger, bolder way than Europe is currently addressing the issue. That's the problem: Europe seems unable to move in the big, bold way markets want them to.

3. While there were comments from Brazilian officials about BRIC countries possibly buying debt of eurozone countries, the speech to examine was Chinese Premier Wen Jiabao, who said that "countries must first put their own houses in order." This is a blunt statement that China is not going to indiscriminately buy euro zone debt.


1. Teleconference with George Papandreou, French President Nicolas Sarkozy, and German Chancellor Angela Merkel set for this morning. Traders are anticipating some kind of joint statement designed to dance around the fact that Greece is failing to meet its fiscal targets. The only that matters is whether the meeting will help convince the Trokia—European Union, International Monetary Fund, and the European Central Bank—to release the next tranche of aid to Greece.

2. The lower house of the Italian parliament approved the Italian austerity plan, which aims to balance the budget in 2013, after Prime Minister Silvio Berlusconi survived a no-confidence vote.

3. Moody's, as expected, downgraded the debt of French banks Societe Generale and Credit Agricole one notch, and left BNP Paribas on review. Moody’s cited the bank’s exposure to Greece’s debt for the downgrade. Societe Generale trading down 3 percent in Europe.

4. Bears outnumber bulls: For the first time since March 2009, more bears than bulls among the weekly poll of "Investors Intelligence" financial writers: bulls at 35.5 percent (down from 38.7 percent the week before), bears increase to 40.9 percent (from 37.6 percent). Those expecting a market correctiondecreases to 23.6 percent from 23.7 percent. Remember, high levels of bearishness is traditionally considered bullish: March 2009 was near the bottom.

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