European Central Bank

The alarm over potential bank runs in Greece and Spain this week has highlighted an often-overlooked fact: Europe's debt crisis is also, in many ways, a major banking crisis. In capitals such as Athens, Madrid and Rome, large portions of the sovereign debt racked up by spendthrift governments are owed to the countries' own banks, locking governments and the banks in an embrace so tight that disaster for one would almost certainly spell doom for the other. International bailouts for Greece, Ireland and Portugal have helped to keep not just their governments but also their banks afloat, as well as financial institutions in other parts of Europe with large exposure to those nations' debts.

BERLIN - If it seems to German Chancellor Angela Merkel that the world is against her, she may be right. Her insistence that debt-ridden European nations cut their way out of financial crises helped cost her conservative political party two state elections this month, exposed her to criticism as an inflexible taskmaster across the Eurozone and unleashed a torrent of anti-austerity venting that has toppled like-thinking national and regional leaders...

The European Central Bank could cut interest rates further and resort to alternative measures to fight the economic crisis after trimming the benchmark rate to its lowest point since World War II, its president, Jean-Claude Trichet, said Thursday. Although the quarter-point cut to 1.25% on Thursday was smaller than most analysts had predicted, Trichet said he did not exclude the possibility, "in a very measured way, that we could go down from the present rate."

When Germany'schancellor, Hannelore Kraft, met France's president, Francois Hollande, in a sunny Berlin earlier this week, they agreed on a compelling strategy to save the Eurozone. With no elections due in any Eurozone country for the next two years, they were able to stretch the austerity timeline for Greece, Spain and Italy, add some elements of growth stimulus but also keep up the essential pressure for fiscal discipline and structural reform. As a result, even devastated Greece began to glimpse light at the end of the tunnel.

After 21 months of battling to deal with their own economic problems, Europeans watched Monday as their financial woes at home were aggravated by trouble from abroad. The aftershock from the downgrading of America's credit rating Friday sent the continent's stock markets tumbling, despite hints that the bad news from the other side of the Atlantic may have begun to galvanize Europe's dithering leaders into concerted action. After a series of late night negotiations over the weekend, the European Central Bank made good Monday on its promise to begin buying bonds of Spain and Italy, big economies whose debt levels have prompted growing questions.

When Germany'schancellor, Hannelore Kraft, met France's president, Francois Hollande, in a sunny Berlin earlier this week, they agreed on a compelling strategy to save the Eurozone. With no elections due in any Eurozone country for the next two years, they were able to stretch the austerity timeline for Greece, Spain and Italy, add some elements of growth stimulus but also keep up the essential pressure for fiscal discipline and structural reform. As a result, even devastated Greece began to glimpse light at the end of the tunnel.

Hoping to head off investor fears that Spain and Italy could be the next European economies to collapse, the head of the European Central Bank on Tuesday urged parliaments in the 17-nation Eurozone to move faster on implementing spending cuts and approving a new bailout package. Jean-Claude Trichet, the central bank's president, also defended its decision to temporarily intervene to bring down soaring yields on the two nations' government bonds by purchasing an unspecified amount on the secondary market.

The European Central Bank left little doubt Thursday that it planned to raise interest rates for a fifth time in October, after it released upbeat growth forecasts and gloomier inflation prospects. The central bank held its key rate at 3% at its monthly rate-setting meeting as widely expected, but afterward prepared the ground for a hike by employing the phrase "strong vigilance" against mounting price dangers.

The European Central Bank is expected to lower interest rates for the first time in more than a year this week to boost faltering economic growth, analysts said. The ECB's 18 policymakers will reduce the benchmark rate by as much as half a percentage point to a three-year low of 2.75% when they meet Thursday, according to the forecast of 30 economists surveyed by Bloomberg News.

From the day he entered the White House, the biggest threat to Barack Obama's chances of becoming a two-term president has been the battered state of the U.S. economy. There have been new signs of trouble this spring: slower job growth, higher gasoline prices and fresh fears over the European debt crisis. Yet Obama's prospects on the economic front may be brighter than they now look. This past weekend brought encouraging signs that Europe is ready to take stronger action to confront its still-serious debt problems.

WASHINGTON -- One by one, the world's top finance officials Saturday pressed Europe to do more to shore up its debt problems, warning that the global recovery remains fragile and that the Eurozone  shouldn't relax now that it has secured more resources to fight the crisis. In statements issued a day after officials announced commitments to boost the International Monetary Fund's emergency lending capacity by $430 billion, finance ministers meeting here called on euro-area policymakers to strengthen their banks and continue to make economic reforms that would lead to stronger and more balanced growth.  U.S. Treasury Secretary Timothy F. Geithner, while welcoming the new commitments to bolster the IMF's firepower, said: “The success of the next phase of the crisis response will hinge on Europe's willingness and ability, together with the European Central Bank, to apply its tools ... flexibly and aggressively to support countries as they implement reforms.

The 17 nations of the Eurozone agreed Friday to increase their bailout resources in an attempt to keep a lid on the debt crisis that has hobbled the region's economy and raised doubt about the future of the euro. But the new total of about $1 trillion in rescue funds still falls short of what many analysts and investors have suggested is necessary to insure major economies such as Spain and Italy against a possible default. Also, more than a third of the money is already committed to rescue packages for Greece, Ireland and Portugal, meaning that the actual amount available is considerably less.

Renewed fears of a European recession are threatening to derail the stock market's 2012 rally. Stock indexes around the world experienced their sharpest drops of the year Tuesday, with the Dow Jones industrial average logging its first triple-digit loss since December. Over the last five months the blue-chip index has risen more than 20% to its highest point since before the financial crisis, driven by good economic data in the U.S. and growing hope that European leaders had contained the debt crisis there.

In Europe, seeing the ministers and heads of state doing their song-and-dance routines over how best to resolve the long-running financial crisis might be commonplace, but for a brief engagement at a Berlin playhouse, that spectacle would at least offer real songs and actual dancing. "EuroCrash!," an English-language monetary unit musical, has arrived to do a send-up of the continent's currency. For the playwright, the Economist magazine's Berlin correspondent David Shirreff, it seemed a natural outlet for someone sitting on such a surfeit of fodder.

  If Berlin's Alexa shopping center is any indication, Germany is having a very good crisis. While the rest of Europe enacts crippling austerity measures to soothe nervous creditors and bring down dangerously high interest rates, shoppers continue to pour out of Alexa's doors with bags full of presents to sip mulled wine in the cheery Christmas market outside. Fenja Kothe, a social worker juggling three shopping bags, said she and her countrymen felt no need to cut back on their purchases this holiday season.

The stock market took a late afternoon fall after European finance ministers failed to come up with the full amount of money pledged for a bailout fund. Banks led the way down. Morgan Stanley dropped more than 5% and Bank of America Corp. sank 4%, the biggest fall in the Dow Jones Industrial average. The Dow lost 100 points, or 0.8% to close at 11,766. The S&P 500 index fell 14 points, or 1.2%, to 1,205. The Nasdaq composite index fell 32 points, or 1.3%, to 2,523. Cautious comments from the head of the European Central Bank also helped push stocks lower.

On New Year's Day almost a decade ago, cash registers and ATMs across Europe started spitting out the shiny coins and crisp notes of the world's newest currency, the euro. They were the most radical, tangible symbol of the long march toward reconciliation and harmony on a continent still haunted by the memories of two world wars. A single currency, proponents said, would set the seal on an era of European unity that already boasted free markets and free movement. Now, officials are working feverishly to ensure that the currency survives a raging debt crisis that threatens its 10th birthday.