DEBT FINANCING. Marseille establishes differences G7 naked and lack of political room

Marseille (Reuters)-vague promises and lack of action by G7 countries pointed out the differences between Europe and the United States and the lack of space for maneuver before the worst loss of confidence since the credit crisis.
After weeks of turmoil in the markets, the Finance Ministers and Central Bank Presidents from the Group of seven industrialized countries promised a coordinated response on Friday the global downturn, but offered no specific steps and differed in emphasis on the debt crisis.
Although the United States called on the biggest European economies to support "unambiguous" peripheral States struggling to overcome a debt crisis that is crippling the recovery of the world, euro zone Germany Treasurer said the priority cutting deficits.
"There's no sense of direction, wholly designed taking into account that there is no agreement on the path to fiscal policy between the United States and Europe, and there is agreement on the path of monetary policy," said Gilles Moec, senior economist with Deutsche Bank in London.
"In some ways, is a statement which is a list of restrictions that policy-makers are facing," he said of a host country of the final declaration the French pushed to other G7 members reluctant to produce at the end of the talks that invaded for almost two hours.
Despite initially saying that there was no need for a statement, France changed his tune to send a signal to drive markets after Wall Street fell nearly 3 percent on Friday.
"The announcement was at the insistence of the French, but in practice it is meaningless. Still cannot agree on the problems, so how can we agree on an analysis, "said a delegate of the G7.
Markets were roiled by the already beaten Friday resignation of high-ranking German on European Central Bank in protest against the database connection purchase program, laying bare divisions within the sphere of European policymaking as well as the G7 global differences illustrated.
NO TALK OF COORDINATED STIMULUS
Final "terms of reference," less binding than a formal communique, G7 acknowledged tensions in the markets and clear signs of a slowdown in global growth.
"We are committed to a strong international response to these challenges," he said, but provided no further specifications in addition to urging fiscal adjustments conducive to growth.
The statement voiced support for the plan of work of $ $447 billion of United States President Barack Obama and decision of 21 July in Europe to strengthen the powers of the EFSF rescue facility in the eurozone, but papered over cracks in the political differences.
Speculation had swirled in some neighborhoods that Presidents of G7 central banks may signal a coordinated monetary stimulus involving quantitative easing, but a second representative of G7 said that possibility has not yet been discussed.
"It is not realistic for the market and expect us to put hundreds of billions on the table, each time we meet," he said.
Geithner said at Friday's meeting that he was confident that the US Government would reach at least a substantial part of the package jobs Obama's Congress despite Republican Resistance, another delegate said.
But US officials said that most of the meeting was devoted to Europe's debt crisis and the health of their banks.
Seeking to calm fears about the financing bank, the ECB President, Jean-Claude Trichet said European banks meeting made about $ 5 trillion in guarantee eligible for access to funds of the central bank.
While Japan said it had received G7 blessing of unilateral action in foreign exchange, delegates said that the problem had not really even been discussed in depth at the meeting, and the statement simply had used the wording from previous statements.
(Additional reporting by Giselda Vagnoni; Edited by Catherine Bremer, Mike Peacock)

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