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Latest update: 14/11/2011
- Angela Merkel - debt - eurozone - Germany - Greece - Italy
Eurozone crisis 'toughest hour since World War II’, says Merkel
Germany Chancellor Angela Merkel described the ongoing euro zone crisis as the continent's “toughest hour” since World War II on Monday as new leaders in Italy and Greece hustled to form governments amid growing fears over their debt-hit economies.
By News Wires (text)
REUTERS - German Chancellor Angela Merkel said on Monday that Europe could be living through its toughest hour since World War Two as new leaders in Italy and Greece rushed to form governments and limit the damage from the euro zone debt crisis.
A rally on financial markets sparked by the appointment of respected European technocrats in Rome and Athens soon stalled. Analysts warned that daunting obstacles could hinder the decisive action needed to revive their ailing economies.
Italy had to pay a euro-lifetime record yield of 6.3 percent to sell five-year bonds with investors wary of buying its debt until prime minister-designate Mario Monti can undertake profound economic reforms.
In a first sign of trouble for new Greek Prime Minister Lucas Papademos, the leader of the main conservative party rejected any toughening of austerity and refused to sign a letter sought by European authorities pledging support for a new 130 billion euro bailout.
Merkel put the situation facing the euro zone into stark relief in an attempt to rally her conservative party behind the government at a congress in Leipzig.
“Europe is in one of its toughest, perhaps the toughest hour since World War Two,” she told her Christian Democrats (CDU), saying she feared Europe would fail if the euro failed and vowing to do anything to stop this from happening.
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In a one-hour address, Merkel called for closer European political union but offered no new ideas for resolving a crisis that has forced bailouts of Greece, Ireland and Portugal, raising fears about the survival of the 17-state currency zone.
European Union governments have until a summit on Dec. 9 to come up with the outlines of a bolder and more convincing strategy, with some form of massive, visible financial backing.
Prospects are uncertain as the German government, the Bundesbank and hardliners in the European Central Bank have blocked key policy options. These include issuing common euro zone bonds, mutualising the euro zone’s debt stock, letting the ECB create money to fight the crisis, or having it act as lender of last resort, directly or via the euro zone rescue fund.
Finance Minister Wolfgang Schaeuble told Reuters that Germany wanted Europe to push through changes to the EU’s Lisbon Treaty by the end of 2012 that set the foundation for a common fiscal policy in the bloc.
He conceded some non-euro states might oppose that but said they should not prevent the 17 euro zone countries going ahead.
“The most important thing is quick agreement on the structures for a fiscal union,” he said.
High drama in Rome
In weekend drama, Italy’s president asked Monti, a former European commissioner, to form a government to reverse a disastrous collapse of market confidence in an economy whose debt burden is too big for the euro bloc to bail out.
Italians sang, danced and drank champagne in the streets to celebrate the resignation of scandal-plagued billionaire Silvio Berlusconi, and an impromptu orchestra near the presidential palace played the Hallelujah chorus from Handel’s Messiah.
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The ECB has been buying troubled euro zone governments’ bonds episodically to try to stabilise markets. But figures released on Monday showed it halved its weekly bond buy at the height of the Italian government crisis last week, suggesting it was no longer willing to help Berlusconi.
After a tumultuous week, when Italy’s borrowing costs rose to the kind of levels that saw Ireland and Greece forced to seek international bailouts, initial market reaction was positive on Monday, with both stocks and bond markets lifted.
But in a sign of the fragile state of confidence, the trend was reversed after the Italian bond auction, and the release of figures showing industrial production slumped by 2 percent in the euro zone in September, raising the spectre of recession.
Monti held talks with political parties on Monday before separate meetings with trade unions and employers on Tuesday, as he moves to appoint what is expected to be a relatively small cabinet made up of experts from outside parliament.
He went to work after a frenetic weekend in which Italy’s parliament approved a package of economic reforms agreed with European leaders, clearing the way for Berlusconi to resign.
“Monti spoke about a significant programme with many sacrifices,” Francesco Nucara, a lawmaker from one of the myriad tiny parliamentary groups involved in the talks, said after meeting the prime minister-designate.
Monti told a news conference that political parties must understand the depth of the crisis, and that he aimed to serve until scheduled elections in 2013, not just until reforms had been pushed through.
“No silver bullet”
Global equity markets and the euro slid on doubts the incoming Italian and Greek leaders would take the tough steps needed to resolve the debt crisis.
Mark McCormick, currency strategist at Brown Brothers Harriman in New York, called the national unity governments in Italy and Greece “the necessary policy response to avert a meltdown”, but said they were “unlikely to be a silver bullet”.
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 succeeded George Papandreou, whose proposal to hold a referendum on the bailout terms prompted EU leaders to raise the threat of a Greek exit from the currency bloc.
The new premier, who oversaw Greece’s entry to the euro zone in 2002, must win a confidence vote on Wednesday before meeting euro zone finance ministers in Brussels on Thursday.
He told parliament at the start of the confidence debate that the policies needed to secure an international bailout had aggravated the recession, but added that Greece had no choice but to remain within the euro zone.
Reforms—including widening the tax base and fighting rampant tax evasion—could mitigate the problem, he said.
The Herculean task he faces was illustrated when New Democracy leader Antonis Samaras said he would not vote for new austerity measures. Spending cuts and tax rises agreed with foreign lenders should be changed in favour of economic growth.
“I agree with the goals to cut government spending ... to reduce debt, to erase the deficit, to make structural changes. I do not agree with whatever stunts growth,” he told party MPs.
Inspectors for Greece’s international lenders, known as the troika, were due to meet Papademos’s administration after the confidence vote, but uncertainty grew whether they would come.
Disruptive demonstrations
Most Greeks hailed Papademos’s appointment, but thousands of people angry at more than a year of austerity are expected to rally on Thursday, the anniversary of a 1973 student uprising that helped to bring down a 1967-1974 military junta.
That could complicate talks between the troika and the new cabinet, as the demonstration is expected to shut down central Athens and could be the biggest rally in months of protests that have at times turned violent.
Carlos Martin Ruiz de Gordejuela, spokesman for the European Commission’s mission in Greece, said the troika team “may come at the end of the week but nothing is fixed”.
Monday’s euro zone industrial production figures pointed to a sharp contraction towards the end of the year and the risk of a double-dip recession.
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Comments (21)
if I recall
If I recall, WWII was self inflected by the Germans. They lost and destroyed Europe. Again they try to subdue Europe, they will lose and destroy Europe. Watch and see !
Censorship
Yes nothing like a free exchange of ideas. We will publish your post if you agree with us.Right Hand Raised , fingers pointed outwords, heels cliked, words heard, "ZEIG HEIL".
No evil is greater than the
No evil is greater than the satanic mentality that thinks, lending money to individuals and ever more so, to lending money more and more to nations, which is the case now! The creating of the IMF and the World Bank initiated by this very United States of America, which itself is in deep and ever deeper trouble financially because the politicians in DC are nothing better than evil, and making money themselves, while writing laws for the general public to abide by and exempt themselves from obeying them. Time seems to be almost up, for any change to come about in the USA and in the whole of planete arth.
socialism/communism
Everyone says We must be like Europe,So if they are so smart, why are they acting so Dumb? Europe spent huge amounts of money to fight aginst SOCIALISM AND COMMUNISM after WWII. Anyone rember Berlin wall?? And yet they have chosen to accept it now..Do you see anythig smart about that? And now they want the USA to follow in their foot steps and jump off the cliff!! NO, I DON'T THINK SO... WE ARE NOT THAT STUPID,OR ARE WE???
And who Started
And who started WWII? It was Germany trying to subdue Europe. Thier misery was self inflicted in the end. But they haven't given up. this time they use economics,
last time this happened ,they invaded poland
i think the best that can happen is a quick death of the euro
and a heavy re-regulation of the banks ,etc instead of bleeding the common worker to pay for the banks greed
Europe's "toughest" hour
Yeah, tougher than Berlin in 1949 and 1961. Sure. It's only tough for the hundreds of millions who want "free" stuff from other people. Maggie Thatcher wouldn't be whining about this.
LOL@EU
HAHAHA
Fluffing the Crisis
The whole monetary crisis has been promoted by the elites. The average citizen would know nothing about it all if the politicans and Banksters hadn't been flogging the issue relentlessly for since 2008.
We're all suppose to be afraid so we accept the NWO as the savoir of all mankind. The very people that have been terrorizing us with the fake budget situation they created will now save us... What do you think about that?
It's the government itself and the elites that have been driving the off the books banking casino who now expect us to pay for their "losses"....
Just Stop!
"German Chancellor Angela Merkel said on Monday that Europe could be living through its toughest hour since World War Two." During WWII millions of people were being killed. Just stop and deal with the crisis!
Toughest hour since WW2
I am sure now that Merkel wants to take over and Control Europe, This has not been done Since WW2..
Germany
Germany caused ore human misery in the 20th Century that any orter country. They tried twice to subdue Europe through military power, destroyed Europe and failed. They have not given up. This time they try to control through the economy , well fail and bring down Europe with them. Read your History, see what is happening now and you have to agree. Controlling Europe is in their DNA. Merkle has already said, if the EU does not suceed, there could be war. That is a vailed threat.. Do not take it lightly. Hitler said, if he was not allowed to take over Austria, there may be war. Then He made the same threat with the Sudetenland. We let him do it without a shot fired. Beware of the Germans.
Oh Oh.
If we see the Panzers start too roll, it could be a problem.
Euro Zone Crisis
America. You're are looking into a crystal ball fore telling your future if you continue on the path the progressive social justice gang has put you on.
If you value your country,your freedom and want to pass on the American dream to future generations as your parents did for you, changes need to made to the government to change course.
Germany
Germany should abandon Greece and Italy to their far leftist socialist style economy and let them suffer and go down.
Europeans were too hasty
The EU constitution does not allow Merkel to move ahead with her solution. In fact, there is no constitutional device to allow the EU to boot any country out, or demote any country to another status. So filled with hubris and assurance that the EU was to be the saviour of Europeans, they neglected to think about what happens when evrything turned into a brown steaming pile.
If the policy is the same - why the celebration?
The new guy plans to implement the same policies that the old guy implemented. Why the celebration? If the same policies under the old guy did not improve things, why will they under the new guy?
First Comment
Can someone explain to me why Germany hasn't dumped the Euro, and revived the DM at a fixed exchange rate? (similar to the currency games the Chinese are playing) Just seems like Germany is holding the Euro together for no other reason than "European United" (aka post-war guilt). Seems rather stupid, that a country with so much potential artificially holds itself back.
Oops
Play with the buzzard nosed people and you get burned every time, without fail.
Germany on the rise
'toughest hour since World War II - Does this mean Merkel is going to invade Poland again?
Buy Gold
Buy Gold, these loons are going to print money like it's no tomorrow!
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