Euro's Reaction to Mer-Kozy Meeting

The Euro jumped about 40 pips near the US open on the announcement of agreement between Mer-Kozy at today's meeting.

There's the reaction in green.

According to SKY NEWS:

German Chancellor Angela Merkel and French President Nicolas Sarkozy have presented a united front after meeting in Paris, at the start of a crucial week for the eurozone.

They have announced that they want a new treaty for Europe - whether or not Britain is involved.

Proposals for treaty change, allowing greater fiscal integration in the eurozone, will be presented at the EU leaders' summit in Brussels on Friday.

Mrs Merkel has long said she wants the European Union to oversee the budgets of all 17 euro-currency nations.

Mr Sarkozy, who is just five months from a presidential election and had previously expressed opposition to handing over budgetary control to an unelected European body, seems to have come round to the idea.

On Sunday, Deputy Prime Minister Nick Clegg warned the eurozone is "skating on very thin ice" ahead of the summit, which is being seen as possibly the last chance to avert a breakdown of the euro.

Other Headlines from the meeting:

• SARKOZY CITES COMPLETE AGREEMENT WITH GERMANY REACHED
• FRANCE, GERMANY SEEK TO PREVENT REPEAT OF CURRENT CRISIS
• FRANCE, GERMANY WANT `NEW TREATY' FOR EU
• AUTOMATIC PENALTIES BACKED FOR BUDGET VIOLATORS, SARKOZY SAYS****
• SARKOZY SAYS PREFERENCE IS FOR TREATY AMONG 27 EU COUNTRIES
• EURO BONDS ARE `IN NO CASE' A CRISIS SOLUTION, SARKOZY SAYS***

Sarkozy's 180 is interesting, but they were under a lot of pressure, however he has been changing his stance of disagreement with Merkel for a couple of weeks now.

What this new treaty essentially means is that a Central European governing body (most see Germany as the power behind it) will have the authority to veto any member nation's budget and impose penalties for violations. It sounds like a scary new European Grand Plan, a little big brother-ish and sentiment is already fairly negative toward Germany, countries giving up more of their sovereignty may not go over so well in some countries, but it also seems clear that the German's don't really care and have been ready and making contingency plans to be able to give certain countries the boot.

After last night's rumor from Die Welt about the F_E_D possibly financing the IMF, thereby bypassing Congressional approval, none other then Timothy G. is going to Europe, "According to the article" to mention this idea. Timothy G. has also been one of the loudest voices screaming for the ECB to print and monetize debt because we all know how well that has worked here in the US. It seems to me that the rumor of the F_E_D financing the bailout of the EU may be in fact a way for Timmy G and the US administration to try to embarrass the ECB in to action, kind of "If your own Central Bank won't do what needs to be done, how about our Central Bank does it for you, you wimps!" Yes, I thought about that laying in bed last night after the last post.

Interesting...