Thurs, 10/20/2011 5:19 PM – Waiting on European Summit

Stocks went back and forth from positive to negative today, trading on various rumors surrounding the weekend European Summit that markets hope will result in some sort of agreement on how to solve the Euro crisis. For example, the meeting is postponed, then an hour later – no, it’s back on.

Markets may be up Friday on hope but the issues are large and very difficult to solve within the framework allowed by the Eurozone treaties and the reluctance of the European Central Bank to directly participate in bailing out countries like Greece and Italy.

Italy, by the way has a staggering 1.3 trillion Euros in debt, most of which it needs to refinance in the next 6 months. If Greece is a problem that has proven extremely difficult to resolve, Italy is exponentially larger, at least in terms of size. You can force banks and other investors to take a 50 billion euro loss on Greece but when you start talking hundreds of billions that is a whole different ballgame.