While European economies continue to weaken and the U.S. manages very slow growth that has kept unemployment over 9%, it appears that the 17 sovereign countries that comprise the Eurozone are unable to commit to a comprehensive solution to Greeces crushing debt load. The Greek problems have been known to everyone for close to two years, but during this time it has proved impossible to put together a comprehensive solution, particularly one that the two largest members of the Eurozone, France and Germany, can support. When it became obvious on Friday that French President Nicolas Sarkozy and German Chancellor Angela Merkel could not reach an agreement on a comprehensive solution prior to this weekends summit in Brussels, world leaders, including British Prime Minister David Cameron, U.S. President Barack Obama, and Chinas Premier Wen Jiabao all reached out to the major players and called on them to restore confidence in the euro, the common currency that the 17 nations share. While Sarkozy and Merkel continue to debate the proper course, the underpinnings of the global economy weaken. (FT October 21, 2011) One of the stumbling blocks is the size of the haircut that bondholders will have to take on the Greek debt. Germany is insisting that Greeces private-sector bondholders take a big hit to reduce Greeces debt to a more sustainable level, a proposal that France and the ECB are resisting for fear that it could accelerate bond investors flight from Southern Europe. (WSJ October 22, 2011) Some believe that the bondholders could be facing a 50%-60% haircut, which is significantly larger than the previously agreed to 21% negotiated only three months ago. (FT October 21, 2011) The Greek parliament has approved the austerity measures required for the bailout, but the weight of these measures combined with a lack of confidence has led to a much more severe contraction than anticipated. There is a sense that it could take at least a decade for Greece to restructure its economy and not need bailout funds from the other Eurozone members.This weekends summit, followed by a second one later in the week and the G20 summit in Cannes early next month, will be watched closely by the world. The global markets demand a solution that restores confidence in the euro. I will be flying late on Monday to Barcelona, Spain, where we will launch Plan Sponsors European Conference: Uncommon Solutions for Pension Schemes
.On a more positive note, when I was in London two weeks ago the Conservative party was holding their annual conference and I watched with interest as George Osborne, the Chancellor of the Exchequer, unveiled a plan to help small businesses. There is more the government itself can do to get credit flowing and encourage investmentEveryone knows Britains small firms are struggling to get credit and banks are weak. So as part of my determination to get the economy moving I have set the Treasury to work on ways to inject money directly into parts of the economy that need it, such as small businesses. (FT October 3, 2011)As I have written previously, entrepreneurial small businesses are the ones that create new jobs and are necessary if we want to significantly lower the stubbornly high unemployment rate. We need more creative ideas from our government leaders to assist these engines of job creation.Finally, I trust most of us occasionally dine alone on long business trips and are faced with a rather limited choice of wines by the glass, if we choose to have two glasses of wine with our meal. On my last night in London, I was dining by myself on a Friday evening in Amaranto, in the refurbished Four Seasons London, and discovered a very innovative approach to this issue. Approximately 50% of the wines on their list are offered by the glass with a two glass minimum. This covers the cost of the wine for the establishment, with the possibility of selling the remaining two glasses to another diner. I spotted a wine I have had before, from Tenuta Argentiera, a small Tuscan producer located in the Bolgheri region, and with my two glasses enjoyed a wonderful meal prior to flying back to New York early on Saturday morning.