Open Europe
Thursday, 4 August 2011
Europe
Berlusconi claims Italian economy is solid and blames increasing borrowing costs on speculators;
ECB may resume bond buying programme to appease financial markets
In a speech to the Italian Parliament yesterday, Italian Prime Minister Silvio Berlusconi insisted that Italy has “solid economic fundamentals”, in particular a solid banking sector, low household debt and a modest deficit, which, he claims, are not being correctly assessed by the markets. Berlusconi did not offer any new policies, but blamed Italy ’s troubles on speculators and wider weaknesses in the eurozone and global economies. Berlusconi also insisted that the current government would serve out its full term, implicitly rejecting any calls for his resignation.
European Commission President José Manuel Barroso also issued a statement yesterday, calling the market fears over Italy and Spain “unwarranted”, yet admitting they represent wider fears about the eurozone as a whole. Barroso reiterated that the necessary steps to tackle the crisis had been agreed under the second Greek bailout, but urged swift implementation of these measures. Open Europe’s Raoul Ruparel appeared on RT discussing the spread of the crisis to Italy and Spain .
Meanwhile, Spanish Prime Minister José Luis Rodríguez Zapatero, left for his holiday after delaying it on Tuesday, only to return to Madrid for an emergency meeting with Finance Minister Elena Salgado and meetings with European officials, according to the WSJ. Spain is due to hold a bond auction today which should display market sentiment towards the Spanish economy. Both Spanish and Italian borrowing costs look to have fallen slightly this morning, although whether the response from eurozone leaders will have a lasting impact is unclear.
The Telegraph reports that, according to European officials, the ECB could reverse its decision to stop purchasing eurozone government bonds at its monthly meeting today. The ECB has been reluctant to purchase bonds over the past few months and the responsibility had shifted to the European Financial Stability Facility (EFSF). However, with the EFSF’s new role yet to be ratified by eurozone governments, the ECB may agree to step-in during the interim to help quell the rising borrowing costs for Italy and Spain . The ECB looks unlikely to raise rates and may be discouraged from hinting at future rate rises given the recent slowdown in economic growth across the eurozone and fears over contagion.
FT WSJ WSJ 2 CityAM Irish Times BBC Corriere della Sera Independent Le Figaro IHT FTD Guardian Guardian 2 Guardian 3 FT 2 EurActivEurActiv 2 European Voice Irish Times 2 Economist: Charlemagne’s blog El Pais El Pais 2 El Pais 3 FTD 2 BBC 2 EUobserver BBC 3EUobserver 2 FT 3 WSJ 3 Irish Times 3 IHT 2 FT 4 Telegraph Telegraph 2 Telegraph 3 Handelsblatt FT: De Grauwe FT Editorial WSJ Heard on the Street WSJ: Smith FTD 6 BBC: Hewitt BBC: Today Le Monde: Godement El Pais: Amor and Mora Irish Independent FAZ FTD
Italian press disappointed by Berlusconi’s speech
All the main Italian newspapers feature comment pieces expressing disappointment at Italian Prime Minister Silvio Berlusconi’s speech in the Italian parliament yesterday. An editorial in Il Corriere della Sera notes, “The house keeps burning without anyone grabbing a fire extinguisher…[Berlusconi’s] decision to speak after the markets’ closure could make people expect even some sensational surprise. But nothing. Not even the smallest admission of having done something wrong, despite the country struggling in the quagmire of the crisis.”
A comment piece in La Stampa argues, “Yesterday’s debate in parliament has been unanimously considered as disappointing…If today the markets drag Italy further down, either Berlusconi says what he intends to do to save the country, or he risks leading it to shipwreck together with him.”
In Italy ’s main business daily Il Sole 24 Ore, editorialist Stefano Folli writes, “There’s a famous ironic aphorism by Bertolt Brecht saying, ‘when government doesn’t agree with the people, it’s time to change the people’. Yesterday, in parliament, there was a moment when [Berlusconi] seemed to echo Brecht. In substance, he almost said: “When Italy doesn’t agree with the markets, it’s time to change the markets. This because our system is solid and reliable; and who knows why the markets don’t realise that.” He concludes, “If our judgment were to be based only on yesterday’s speech and mediocre parliamentary debate, we should conclude that the worst is just around the corner. On the markets and at home. But who knows? Sometimes good news follow a tortuous path.”
FT Deutschland reports that Germany and France are jointly pushing for Herman Van Rompuy to have the official title of ‘President of the Eurozone’, arguing that giving the euro a common voice would improve working methods and crisis management. The articles notes that several governments see this as an “attack” against Eurogroup President Jean-Claude Juncker.
Writing in the Spectator, former Political Editor Bruce Anderson argues that the euro "could have worked but only through an unattainable transformation in human nature".
No link
Leading French Socialist MP Henri Emmanuelli has said that President Nicolas Sarzoky's proposal, urging the French Parliament to adopt a 'golden rule' on budget deficits, violates the constitution.
According to a report by the European Wind Energy Association (EWEA) half of the electricity requirements could be fuelled by wond power by 2050.
World
Le Figaro reports that France’s Court of Justice will today decide whether to investigate into new IMF Chief Christine Lagarde’s role in a controversial arbitration deal involving French tycoon Bernard Tapie, with Lagarde allegedly abusing her power as the then French Economy Minister.
The UN Security Council yesterday adopted a text condemning human rights violations and the use of force against civilians by the Syrian government. However, the text did not include the EU's proposal calling for a UN investigation into "crimes against humanity".
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