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| Europe |
| Debt crisis: Angela Merkel defies Latin Europe and the IMF on bond rescue |
| 2012-06-23 |
| German Chancellor Angela Merkel has shot down calls for full mobilisation of the eurozone's bail-out funds to halt the raging bond crisis in Spain and Italy, ignoring unprecedented pleas for action from the International Monetary Fund. "Each country wants to help but if I am going to call on taxpayers in Germany, I must have guarantees that all is under control. Responsibility and control go hand in hand," she said after a crucial summit of the eurozone's Big Four powers in Rome. Mrs Merkel -- or La Signora No in Italy -- doused hopes of a break-through on proposals by the "Latin Bloc" leaders of Italy, France, and Spain to deploy the funds (EFSF and ESM) to cap the bond yields of "virtuous" countries vulnerable to contagion, or to recapitalize banks directly to take the strain off sovereign states. "If I give money straight to Spanish banks, I can't control what they do. That is how the treaties are written," she said, before racing off to Danzig to tonight for Euro 2012 quarter final between Greece and German.. Christine Lagarde, the head of the IMF, warned before the summit that the eurozone is under "acute stress" and at risk of a downward spiral. "The viability of the European monetary system is questioned. There must be a recapitalisation of the weak banks, with preferably a direct link between the EFSF/ESM and the banks, in order to break the negative feedback loop that we have between banks and sovereigns." For all the rhetoric at Rome's Villa Madama -- a Rennaissance retreat of the Medici family designed by Raphael -- the trio of Latin leaders seemingly failed to shift German Merkel one inch in the direction of debt pooling or genuine fiscal union. The contrast between pro-forma talk of "more Europe" in the Roman hills and the festering reality on the ground in austerity Europe was not lost on those at the summit. Across the Tiber, much of Rome was paralysed by a bus and metro strike, evidence of the growing resitance to the harsh fiscal squeeze imposed by Mr Monti's technocrat government. French president Francois Hollande did not hide his frustration, warning that France would not accede to German demands for a step-change in EU integration until Berlin puts the neuraligic issue of shared debts on the table. "There will be no transfer of sovereignty without greater solidarity, " he said acidly. The Latin Bloc's soft diplomacy has essentially failed. Europe's key leaders will converge on Brussels for next week's crucial summit as divided as ever on the great issue of the day. The leaders were left offering the thin gruel of infrastructure projects and long-term investment worth €130bn or 1pc of eurozone GDP, financed by leveraging an extra €10bn of base capital at the European Investment Bank. Critics say this type of spending will take years to bear fruit and and will do little to halt the insidious process of debt-deflation already at work across much of Southern Europe. |
| Posted by: |
| #2 Tell France to follow your lead, Germany. They are going to flush themselves and you down the drain otherwise and they just elected another pampered idiot pandering "leader" for them to the the stupid lemmings they already were. |
| Posted by: newc 2012-06-23 22:47 |
| #1 Not the biggest Merkel fan, yet all of the rest of the Euro Nations and the US is calling for Germany to open their banks and she seems to be holding in there alone. Kinda gutsy |
| Posted by: swksvolFF 2012-06-23 18:10 |