ECB policymakers continue to reject international calls to intervene decisively as Europe's lender of last resort, stressing it is up to governments to resolve the debt crisis through austerity measures and reforms. The bond market contagion continues to spread across Europe. Italian 10-year bond yields have risen above 7pc, unaffordable in the long term, while yields on bonds issued by France, the Netherlands and Austria - which along with Germany form the core of the euro zone - have also climbed. With its prized 'AAA' credit rating under threat from soaring borrowing costs, France appeared to plead for stronger ECB action. German Chancellor Angela Merkel made clear Berlin would resist pressure for the central bank to take a bigger role in resolving the debt crisis, saying European Union rules prohibited such action. I believe that the euro zone having so many diverse economies and no fiscal transfers that the ECB needs to act as a lender of last resort and start printing money like any other normal central bank would do - if it does not, then the euro zone could well collapse... and it will ! On the reverse : France is truly pathetic. No balanced budget for decades; Chirac did nothing to restructure France, which has the highest costs for govt. employees in the EU. They surely need a reality check; this pathetic begging for the ECB to print money is ridiculous. They have only now, started a programe of "austerity", but we're not allowed to call it that. I fear far worse is to come when the socialists win the Presidency; than, we may well see a real collapse.
Access Investments-Building Awareness - European Union-ROMANIA
Wednesday, November 16, 2011
ECB policymakers continue to reject international calls to intervene decisively as Europe's lender of last resort, stressing it is up to governments to resolve the debt crisis through austerity measures and reforms. The bond market contagion continues to spread across Europe. Italian 10-year bond yields have risen above 7pc, unaffordable in the long term, while yields on bonds issued by France, the Netherlands and Austria - which along with Germany form the core of the euro zone - have also climbed. With its prized 'AAA' credit rating under threat from soaring borrowing costs, France appeared to plead for stronger ECB action. German Chancellor Angela Merkel made clear Berlin would resist pressure for the central bank to take a bigger role in resolving the debt crisis, saying European Union rules prohibited such action. I believe that the euro zone having so many diverse economies and no fiscal transfers that the ECB needs to act as a lender of last resort and start printing money like any other normal central bank would do - if it does not, then the euro zone could well collapse... and it will ! On the reverse : France is truly pathetic. No balanced budget for decades; Chirac did nothing to restructure France, which has the highest costs for govt. employees in the EU. They surely need a reality check; this pathetic begging for the ECB to print money is ridiculous. They have only now, started a programe of "austerity", but we're not allowed to call it that. I fear far worse is to come when the socialists win the Presidency; than, we may well see a real collapse.
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The row between France and Germany over whether to use the European Central Bank to rescue the eurozone has intensified, further shattering international confidence that a solution can be found to the escalating debt crisis.
On a day when the US president, Barack Obama, accused the eurozone of suffering from a "problem of political will", Paris and Berlin clashed over whether the ECB should be called on to do more to bail out countries that are struggling to borrow.
Obama, on a visit to Australia, warned that Europe's leaders must do more to save the single currency.
"Until we put in place a concrete plan and structure that sends a clear signal to the markets that Europe is standing behind the euro and will do what it takes, we are gong to continue to see the kinds of market turmoil we saw," he said.
Despite his pressure and some renewed buying of Spanish and Italian bonds by the ECB, the rout in markets continued and yields on debt around the eurozone continued to climb. In Italy borrowing costs remained at unsustainable levels, with the benchmark 10-year bond yield at 7.12%.
Italy's new prime minister Mario Monti revealed his cabinet but the announcement did little to quell market worries. Some analysts said the ECB may end up with no choice but to become the main rescue vehicle for the eurozone.
"The key question now is whether it is prepared to step up its efforts to contain the crisis even if the role of lender of last resort is in direct conflict with its inflation fighting mandate. Despite protests to the contrary we expect that the ECB could be pressured into this role purely because it may come down to it being the only institution with the firepower to keep EMU from falling into the precipice," said Jane Foley, senior currency strategist at Rabobank International.
The contagion worries that have stalked the eurozone in recent days intensified. Those sovereign bonds long thought among the safer bets for investors continued to fall in price – so raising yields and effective borrowing costs in Austria, France and the Netherlands.
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