(TEL) Europe Faces Toughest Hour Since Second World War, Says German Chancellor Angela Merkel
Somehow I think it’s good she didn’t say this on Veteran’s Day since what is going on doesn’t feel like war. It is mostly self-created and their “solutions” have made it worse, but it looks like they are preparing for the “final solution” of printing money.
It seems that it has become way too emotional but they will not pause and think about what to do and instead will continue on the path they have started down.
On bright side the French/German yield spread should reduce. On the bad side it will likely be from German yields going up.
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Europe Faces Toughest Hour Since Second World War, Says German Chancellor Angela Merkel
2011-11-14 14:13:11.891 GMT
Reuters
Nov. 14 (Telegraph) — German Chancellor Angela Merkel said
on Monday that Europe could be living through its toughest hour
since the Second World War as new leaders in Italy and Greece
rushed to form governments and limit the damage from the eurozone
debt crisis.
Financial markets on Monday took heart on relief that a key
Italian bond auction drew decent demand from investors and hopes
that new leaders in Greece and Italy would take decisive action
to breathe new life into their sick economies.
“Europe is in one of its toughest, perhaps the toughest hour
since World War Two,” Merkel told her conservative party in
Leipzig, saying she feared Europe would fail if the euro failed
and vowing to do anything to stop this from happening.
But in a one-hour address to the Christian Democrats (CDU),
Merkel offered no new ideas for resolving the crisis that has
forced bailouts of Greece, Ireland and Portugal, and has raised
fears about the survival of the 17-state currency zone.
“If the euro fails then Europe fails, and we want to prevent
and we will prevent this, this is what we are working for,
because it is such a huge historical project,” Merkel said in the
east German city of Leipzig.
In high drama in Rome, the president of Italy asked former
European commissioner Mario Monti on Sunday to form a government
to restore market confidence in an economy whose debt burden is
too big for the euro bloc to bail out.
There was some respite for the euro on Monday morning after
the Italian Treasury paid a record 6.29pc yield to sell five-year
government bonds in the first auction held after Monti was asked
to head an emergency government.
Italy, which last week saw its borrowing costs rise sharply
past the 7pc level that has triggered international bailouts of
Ireland and Portugal, sold the maximum targeted amount of €3bn.
The European Central Bank (ECB) began buying Italian
government bonds as yields rose in the wake of the bond auction.
The appointments of Monti and Greece’s new prime minister,
Lucas Papademos, were greeted with optimism by the money men and
European shares recovered slightly in choppy trade but caution
was ingrained and hard to erase.
“Although there is some progress in both Italy and Greece,
there are still a lot of concerns, prompting investors to cash in
on early gains,” said Joshua Raymond, chief market strategist at
City Index, highlighting the deep-seated concerns.
Berlusconi made a parting call on Sunday for the ECB to
become a lender of last resort to prop up the euro. “This has
become a crisis for our common currency, the euro, which does not
have the support that every currency should have,” he said in a
video message.
ECB policymakers have made plain they want to keep the onus
on governments to bring their debts under control and have
rebuffed world leaders who want the bank to ramp up its
intervention on bond markets to defend Italy and other vulnerable
debtors.
While Italy’s problems and the long-drawn-out departure of
Berlusconi have pushed the collapse of the much smaller Greek
economy backstage, IMF and European leaders will keep Papademos
under pressure to implement radical reforms.
Papademos succeeds George Papandreou, whose proposal to hold
a referendum on the country’s bailout terms prompted EU leaders
to raise the threat of a Greek exit from the currency bloc.
The new Greek leader, a former central banker who oversaw
his country’s entry to the eurozone in 2002, must win a Wednesday
confidence vote in his cabinet before meeting eurozone finance
ministers in Brussels on Thursday, state television reported,
where he will be expected to outline next year’s draft budget
before putting it to parliament.
Opinion polls show Papademos has the support of three in
four Greeks. But he was facing his first protest in front of
parliament on Monday afternoon from left-wing demonstrators who
accuse the new government of working in the interests of bankers.
Inspectors from the “troika”, the International Monetary
Fund, ECB and European Union, start arriving in Athens on Monday,
piling pressure on Greece to qualify for a second bailout worth
€130bn and an €8bn tranche from the earlier bailout, needed to
finance bond payments due at the end of the year, according to
Reuters data.
Greece said on Monday it had raised €380m from the sale of
mobile telephone frequencies to its three main cell phone
operators. The sale forms part of the country’s plan to sell
€50bn of state assets over the coming years to repay its debt.
But in a sign of problems faced by the Athens government,
German construction group Hochtief revealed it may have to take a
financial hit on the value of its road contracts in Greece due to
mass toll dodging by Greek motorists.
In addition, the leader of Greece’s main conservative group
Antonis Samaras said on Monday his New Democracy party would not
vote for any new austerity measures and said the mix of policies
demanded by international lenders should be changed.
“We will not vote for any new measures,” Samaras told a
meeting of his own MPs.
He added that he would not sign any letter pledging a
commitment to austerity measures, as has been demanded by EU
Economic and Monetary Affairs Commissioner Olli Rehn, and that a
verbal pledge should be sufficient.
Rehn has said the EU and IMF will not release the tranche
without written assurances from all Greek parties that they will
back the measures.
In Rome, people sang, danced and opened bottles of
champagne, and an impromptu orchestra near the palace played the
Hallelujah chorus from Handel’s Messiah when news spread on
Saturday that the scandal-plagued Berlusconi, one of Italy’s
richest men, had resigned.
-0- Nov/14/2011 14:13 GMT