European Leaders Still Split Over Reforms

Morning Business Memo:

How many times has a summit been called "crucial?" Once again we're hearing that word being used to describe this week's meeting of European Union leaders. Global investors aren't holding their breaths. The eurozone's two most powerful leaders - Merkel of Germany and Hollande of France - are deeply split in the growth vs. austerity debate.

Former British Prime Minister Tony Blair says the euro will only survive if Germany underwrites the debts of the eurozone's financially struggling members. "That means treating the debts of one as the debts of all, which is very hard for Germany to do," Blair told the BBC. Nations with high levels of debt must carry out reforms which would help restore Europe to competitiveness, he added. "The only thing that will save the single currency now is in a sense a sort of grand plan in which Germany is prepared to commit its economy fully to the single currency," said Blair, who left office and stood down as leader of Britain's Labor Party in 2007.

We're still living in a too-big-to-fail world. An international body representing the Federal Reserve and other central banks says financial firms considered too big to fail still have an interest in risky trading, because they can expect taxpayers to cover big losses. The Bank for International Settlements says in its annual report risky trading is "moving the financial sector towards the same high-risk profile it had before the crisis" that started in 2007.

More signs of a summer slowdown for the economy may be revealed this week. Three new surveys of consumer confidence will be released. All are likely to report declines. The government's May spending and income report due out on Friday is expected to show consumers are cautious. The survey may show no spending increase compared to April.

Do you have a rainy day fund? Many people don't. A new survey finds that nearly half of Americans, some 49 percent, don't have enough emergency savings to cover three months of expenses. A similar Bankrate poll found in 2006 that some 61 percent failed to keep savings to cover three months' expenses. Some experts suggest that six months of expenses is a more appropriate goal, which is an even tougher standard to meet.

Richard Davies Business Correspondent ABC NEWS Radio

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