MidnightWatcher – Prophecy in Motion

By Michael Mainville – “Economic powerhouse Germany played down hopes Wednesday that a crucial debt summit will save the euro as French President Nicolas Sarkozy warned the risk of a eurozone ‘explosion’ was very real.

Piling the pressure on EU leaders due to meet in Brussels from Thursday, Standard and Poor’s put a number of large European banks on review and placed the European Union on watch for a downgrade of its AAA credit rating.

German officials said reaching a deal would be ‘difficult’ as US Treasury Secretary Timothy Geithner pressed Europe for decisive action to tackle the crisis and US President Barack Obama spoke to German Chancellor Angela Merkel.

‘Europe is not out of the crisis. The risk of an explosion abounds as long as the decisions taken with Angela Merkel are not implemented,’ Sarkozy told lawmakers from his ruling UMP party, according to a participant in the meeting.

US stocks erased losses in the last hour of trade Wednesday to end mostly higher, but European stocks and the euro slid as pessimism set in.” Read more.

Downgrade threat could prove final blow to euro rescue fund – “The threat of a credit downgrade to the euro zone’s top economies leaves the bloc’s EFSF bailout fund dangerously exposed, piling yet more pressure on the European Central Bank to step in as lender of last resort. The fund has struggled to attract investors even with the backing of six AAA-rated governments, and on Tuesday S&P followed up a warning of possible downgrades for 15 euro economies by saying it is also reviewing the EFSF.” Read more.

Greeks rush to pull savings out of banks, worsening the crisis – “A Greek bank run looks to be in full swing. In an article from German magazine Der Spiegel on Tuesday, the scope of Greek bank withdrawals is shown in alarming clarity. According to Georgios Provopoulos, the governor of the central bank of Greece, savings and time deposits fell by 13 to 14 billion euros in September and October of this year. And it’s only getting worse. ‘In the first 10 days of November the decline continued on a large scale,’ Mr. Provopoulos told the economic affairs committee of the Greek parliament last month. All that money spilling out of Greek banks is creating a credit crunch that’s making lending nearly impossible.” Read more.