Speaking ahead of a confidence vote in the lower house, Mr Letta said Italy
could not afford to focus simply on trying to cut its huge public debt and
needed a new emphasis on lifting the economy out of recession. He will be backed by his own center-left Democratic Party, Silvio
Berlusconi's center-right People of Freedom (PDL) party as well as centrists led
by former prime minister Mario Monti, with a second vote in the Senate on
Tuesday.
"We will die of fiscal consolidation alone, growth policies cannot wait any
longer," Mr Letta said, noting that the country's economic situation remains
"serious" after more than a decade of stagnation.
However he pledged to stick to Italy's budget commitments to its European
Union partners, announcing he would visit Brussels, Paris and Berlin this week.
Financial market reaction to Letta's appointment and the end of months of
political stalemate after last February's inconclusive election was positive,
with bond yields falling and shares rising....So Letta thinks he can revive the economy! How pray? Any fool can see that Italy can't even find breathing space while it remains
strapped into the "Gold-Standard" like EMU straight jacket and shackled to the
brick wall of Germanic inspired demands to collapse public spending, aka
austerity.
Until this otherwise clever nation comes to its senses and exits EU/EMU,
Italy seem destined to continue its underworld sojourn in the dank dungeons of
economic bondage and fiscal discipline.
Responding to Berlusconi's demands for an unpopular housing tax to be
scrapped, Mr Letta said payments due in June would be halted prior to a wider
overhaul of property taxes but he did not promise to abolish the tax altogether.
He also said he hoped an increase in sales tax, which would see the main rate
rise from 21pc to 22pc planned for July, could be delayed. In a speech laying out an ambitious programme of reforms, Mr Letta said the
welfare system would have to be strengthened, taxes weighing on employment and
young people would be cut and measures to get more women into the workforce
would be passed. He promised to change the current electoral law, which contributed heavily to
the inconclusive election result in February and left Italy in political limbo
for two months as the parties wrangled over forming a government. He also said he would review the progress of reforms in 18 months' time and
if he felt that he had been blocked by other parties he would not hesitate to
assume the consequences, an apparent suggestion that he would resign.
5 comments:
FRANKFURT (Reuters) - There is no general shortage of securities that banks have to deposit at the European Central Bank when they borrow money from it, the central bank said on Wednesday.
Some economists have expressed concerns that a shortage of collateral could have a negative effect on bank lending, but ECB policymakers have said in the past that tighter collateral conditions tend to exist only in parts of the bloc struggling most with the debt crisis.
On average, banks had put forward 2.448 trillion euros in 2012 as collateral at the ECB, up from 1.824 trillion euros the year before. The average amount of the use of the ECB's lending facilities was 1.131 trillion euros in 2012.
"The level of over-collateralisation shows that, at the aggregate level, the Eurosystem's counterparties experienced no shortage of collateral," the ECB said in its annual report.
A general strike against tough austerity measures is under way in Greece, with trade unions calling for "mass mobilisation" of protesters.
The 24-hour action is expected to severely disrupt public services, including transport and hospitals.
The organisers are demanding an end to spending cuts and tax rises.
The government says the measures are badly needed to lead Greece out of a deep financial crisis and six straight years of recession.
The cabinet of Prime Minister Antonis Samaras says the policies are part of continuing moves to ensure more bailout money from international creditors.
In the Eurozone, paying off the public sector debt of €8.8 trillion would require 90% of the entire Eurozone money supply (€9.77 trillion, as defined by M3).
For the UK, I suppose you might just argue that there is a vague chance of succeeding, because total public sector debt (£1.358 trillion) would "only" need about 65% of the total M4 money supply. But that is ignoring the massive amount of private sector debt.
No. It's simple. There is not enough money to pay off debt. And as far as I can see there is only one way out of this mess. It requires the following simple measures.
1.Massive amounts of debt-free money creation by central banks.
2.Direct injection of the newly created money into the economy by a combination of eliminating taxes, infrastructure spending and other public sector activities, and direct payments to citizens.
3.A Financial Transaction Tax imposed by the central bank on all electronic transactions involving that currency to remove any excess money in the system and divert money to the real economy
4.A ban on money creation by commercial banks.
I feel that the situation in Europe is marking time. OK, some things are happening, the statistics continue to worsen, but no-one seems to be trying to undertake an initiative to improve the economic situation anywhere. Countries are being told to implement a particular set of policies, which they then try to do. Their economy heads south and all outside the country seem to just say “its your problem, its austerity”. Doesn't seem to me to be a useful way forward, taking the standard of living of a significant percentage of a population back to at best subsistence survival
PARIS—The leaders of France and Italy on Wednesday said they aim to turn the page on years of euro-zone austerity at a European summit next month, as both countries struggle to rekindle growth in their flagging economies.
Enrico Letta, on his first visit to France as Italy's new prime minister, said European voters would "rebel" against leaders if they failed to resolve the high unemployment and stalled growth that have afflicted the continent's southern rim.
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