Investors and markets queue up to predict Greece default as bank shares drop; Merkel warns German MPs about predicting Greek collapse while minister explores what would happen if Greece left the eurozone; New Libyan leaders call for democratic state with sharia law; Japan wants better defence relations with China; Religious violence in Nigeria; Republicans reject Obama tax plans; and more

Top of the Agenda: Eurozone Debt Crisis Accelerates

The shares of France's three largest banks--Société Générale, BNP Paribas SA, and Crédit Agricole--dropped amid mounting concerns over the banks' exposure to Greek debt (WSJ). Despite an agreement reached this summer by eurozone leaders to provide Greece with a second bailout package, international investors and financial markets are now predicting the country will default on its debt obligations.

Many US financial institutions remain exposed to French banks and at risk of contagion if a liquidity crisis takes hold in Europe. US President Barack Obama called on the EU to address the eurozone crisis by coordinating fiscal policy (Reuters), while Treasury Secretary Timothy Geithner is set to travel to Poland for a meeting with eurozone finance ministers this week.

German Chancellor Angela Merkel warned German politicians against speaking publicly of the potential of a Greek default, saying it was in Germany's interest (DeutscheWelle) to rescue Greece and keep it in the eurozone.

Meanwhile, Italy, a heavily indebted eurozone state at risk of sovereign contagion, said it was looking to China (FT) to buy up its increasingly expensive government bonds.

Analysis

A European economic, banking, and debt seizure inevitably has global ramifications--particularly when the US economy is so weak, writes the Financial Times' Gideon Rachman.

German Finance Minister Wolfgang Schäuble is no longer convinced that Athens can be saved from bankruptcy, and his experts at the Finance Ministry have been working on scenarios exploring what would happen if Greece left the eurozone, says Der Spiegel.

The eurozone, once seen as a crowning achievement in the decades-long path of European integration, is buffeted by a sovereign debt crisis of nations whose membership in the currency union has been poorly policed, explains this CFR Backgrounder.

 

PACIFIC RIM

Japan Calls for Improved Defense Relations with China

Japanese Defense Minister Yasuo Ichikawa called for improved ties between Japanese and Chinese armed forces following a string of territorial disputes (WSJ) in the East China Sea. But Ichikawa insisted that the US-Japan security relationship is the "cornerstone" of the country's national security policy.

JAPAN: Prime Minister Yoshihiko Noda called for nuclear plants (BBC) that were halted during the March nuclear crisis to be restarted, while urging the country to reduce its reliance on nuclear power in the long term.

 

ELSEWHERE:

New Libyan leaders call for Sharia law

Congressional Republicans attack Obama taxes

Nigeria military sent to stop religious violence

 

This is an excerpt of the CFR.org Daily News Brief. The full version is available on CFR.org.