Monti of Italy Warns That Currency Crisis Risks Europe’s Future
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Guardian UK) Disagreements within the 17-nation euro area are undermining the future of the European Union, said Italys Prime Minister Mario Monti as the stand-off on European Central Bank support for Italian and Spanish debt hardened.
The tensions that have accompanied the euro zone in the past years are already showing signs of a psychological dissolution of Europe, he told Germanys Spiegel magazine in an interview published yesterday. I can only welcome the ECBs statement that there is a severe malfunctioning in the market for government bonds in the euro region. Its also true that some countries have to shoulder extraordinarily high costs to finance their debts. Thats exactly what Ive been saying for a long time. He urged swift action to lower borrowing rates.
Investors and politicians are still grappling with the significance of comments on sovereign debt purchases by European Central Bank President Mario Draghi last week. While markets initially tumbled on Aug. 2 after Draghi said Spain and Italy would have to formally request a resumption of the banks bond buying, they rallied the following day as investors concluded that ECB action would occur, albeit on an unknown future date.
The ECB did not restart its bond purchases this week, as widely expected, but pointed to a more important and constructive shift in its approach to managing the crisis, Bruce Kasman, chief economist at JPMorgan Chase & Co., said in an Aug. 3 note to clients. If the arrangement sketched out is fully implemented, the ECB will provide an effective liquidity backstop, enabling sovereigns to retain access to markets for a large portion of their funding needs. ..................(more)
The complete piece is at:
http://www.bloomberg.com/news/2012-08-05/monti-warns-germany-that-euro-crisis-threatens-europe-s-future.html