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Europe begs China: Desperate Euro chiefs look East to fund huge bailout gamble

In Europe News, World News on October 29, 2011 at 3:01 am

By James Chapman

Europe is holding out the begging bowl to China in an effort to keep the rescue package for the single currency alive.

In a clear sign of how the balance of world power has tipped towards the East, EU leaders hope China can be persuaded to hand over huge sums to help bail out the eurozone.

In a further embarrassment, it emerged that the one trillion euro bailout fund announced in the early hours of yesterday does not really exist.

The pot contains only a quarter of that amount, and the rest of the money likely to be ‘leveraged’ – using the existing 250billon euros as security to borrow the rest.

Markets initially reacted with relief after all-night talks on the debt crisis engulfing the eurozone ended with agreement on a three-part package of measures after weeks of bickering.

EU leaders said they would boost an existing euro bailout fund to at least £880million (a trillion euros), recapitalise dangerously exposed European banks and write off half of Greece’s towering debts.

But in the cold light of day, it became clear that there were almost no details on how the bailout mechanism, supposed to act as a guarantor for debt-stricken countries in danger of defaulting on what they owe, might operate.

Full article…

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