Tim describes the eurobazooka as he sees it

Although US Fed secretary Timothy Geithner told the BBC yesterday that “the world can be pleased at the progress now being made by Europe”, The Slog can exclusively reveal this morning that the influential American privately believes the situation is more precarious than it was a week ago.

I understand that, having digested the outcome of Brussels, Geithner is as ever “concerned” about the impasse between France and Germany – regarding both debt guarantees, and a lack of impressive ‘firepower’ against future ‘events’. Said a regular Washington source in the early hours GMT, “The word is that Secretary Geithner thinks [Mario] Draghi should be pumping a lot more money into the banks. He was described to me as “alarmed” by the stress test results, and not encouraged by Berlin’s continued reticence when it comes to bazooka ammunition. Tim believes the markets will want more.”

That expected market reaction has been confirmed by two eurozone credit sources this morning so far. “The UK veto got the headlines,” said one, “but it’s a nothing output.”

Within 45 minutes of the ‘deal’ being announced, ratings agency Moody’s downgraded the debt of BNP Paribas, Societe Generale, and Credit Agricole, citing ‘deteriorating liquidity and funding conditions’. Clearly, the agency shares the Geithner concerns. All this can only pile further pressure on the ECB’s Mario Draghi, who privately also agrees with the Moody’s view about ‘a worsening economic outlook in the eurozone’.

And finally so far – or rather, funnily – Herman Van Rompuy told a press conference this morning that he was “delighted by the new budget oversight”. Malaprop the Belgian strikes again.