TOPICS > Economy

News Wrap: Merkel Warns Eurozone Debt Could Take Years to Fix

December 2, 2011 at 12:00 AM EDT

KWAME HOLMAN: Wall Street moved higher at first on the jobs report, but the gains evaporated as the day went on. In the end, the Dow Jones industrial average lost just more than half-a-point to close at 12,019. The Nasdaq rose less than a point to close just under 2,627. Still, the market had its best week in nearly three years. The Dow, the Nasdaq and the S&P 500 each gained more than 7 percent.

German Chancellor Angela Merkel warned today that it could take years to fix Europe’s staggering debt problems. She spoke amid growing signs European leaders may fashion a more powerful political union.

We have a report from Faisal Islam of Independent Television News.

FAISAL ISLAM: It starts here at the Bundestag, where the German leader, Angela Merkel, vowed this morning to create a fiscal union, a sharing of sovereignty across Europe over taxation, spending and government borrowing.

ANGELA MERKEL, German chancellor (through translator): We have to overcome mistakes that were made when we first created the union and make it a real union. To achieve this, there is no other way but to alter European treaties or possibly to write new treaties.

FAISAL ISLAM: This announcement came just hours after a similar speech from French President Sarkozy.

So, here is the grand bargain that’s being negotiated across Europe. Already, euro-friendly faces are now running all five problem nations, Portugal, Ireland, Spain, Italy and Greece. All have changed governments this year, two with unelected technocratic prime ministers.

In the future, the German chancellor sees the European Court of Justice in Luxembourg as judge and jury, able to legally enforce requirements for EU nations to balance their budgets, essentially an end to their financial independence.

But that might require a change in the EU treaty to be ratified by all member states, possibly those outside the euro such as Britain, too. The prime minister met President Sarkozy in Paris for lunch. But there was apparently little talk of using this moment to win back extra powers from Brussels for Britain.

In the next seven days, we’re going to see epic and historic changes to the way that Europe relates to European countries, and, so far, David Cameron’s playing along because of the economic crisis. That’s pleased Paris and Berlin, but it may go down less well in his own party.

In the short term, the European Central Bank in Frankfurt could step in and buy huge quantities of unwanted government debt for problem nations, such as Spain and Italy, but will only do this if, and only if, this new fiscal union can guarantee discipline and economic stability.

KWAME HOLMAN: Merkel is set to meet with French President Sarkozy on Monday to outline possible changes to the EU treaty. Those proposals will be debated at a summit of EU leaders next Friday.

Republican presidential candidate Herman Cain will announce the future of his campaign tomorrow. Cain has been rocked by allegations of a longtime affair and charges of sexual harassment.

He spoke at a rally this afternoon in South Carolina.

HERMAN CAIN, (R) presidential candidate: I am reassessing because of all of this media firestorm stuff. Why? Because my wife and family comes first. I got to take that into consideration. Tomorrow in Atlanta, I will be making an announcement, but nobody’s going to get me to make that prematurely. That’s all there is to that.

KWAME HOLMAN: Cain has denied all the allegations. He’s said he will meet with his wife, Gloria, this evening.

In Egypt, results trickled in today from this week’s parliamentary elections, the first since President Mubarak was ousted in February. Officials said turnout was more than 60 percent, but many of the races were headed to runoffs. From all indications, the long-banned Muslim Brotherhood placed first, followed by an ultra-conservative Islamist party.

Fresh violence raged today across Syria today. Activists said at least nine people died and dozens were wounded. The worst of it was around a town near the border with Lebanon. Explosions and heavy gunfire there lasted for more than six hours. At the same time, members of the Syrian uprising reported that, in November alone, at least 950 people were killed, the deadliest month yet.

Large sections of the American West were picking up today from a violent windstorm on Thursday. Hundreds of buildings were damaged, and several cities declared emergencies.

On Utah highways, 18-wheeler trucks were tossed like toys. Debris flew at upward of 100 miles an hour in some places across the West. Surfers took advantage to ride virtually-unheard-of windblown waves on Northern California’s Lake Tahoe.

MAN: That looks like a eucalyptus tree, man.

KWAME HOLMAN: And, everywhere, large trees snapped and splintered.

WOMAN: We couldn’t even get out. We had to like crawl through trees. We thought it was going to come through the house.

KWAME HOLMAN: High winds are a late fall fixture for parts of California and the Baja Peninsula, but Thursday’s big blow was once-in-a-decade.

A strong high-pressure system collided with cold low pressure, funneling winds down mountain canyons and slopes to the state’s coastal plain — the result, hurricane-force gusts that spread destruction across Utah, Wyoming, Arizona, New Mexico and Colorado.

Overall, more than 300,000 homes and businesses lost power, including Los Angeles International Airport, where all the lights went out briefly. Scores of trees were downed all over the West onto power lines, cars and homes.

MAN: We had a crashing sound like an airplane hitting the house, and you can see the hole that the tree brought in. It shook the house like an earthquake. I actually thought — I woke up thinking it was an earthquake.

KWAME HOLMAN: The damage had utility crews out in force today across the region. And fire crews still were busy, especially in California, battling at least a dozen windblown fires.

Those are some of the day’s major stories.