Signs of stress were once again evident in the bond markets on fears the crisis would rapidly spread, with yields on Italian and Spanish government debt climbing closer to the dreaded 6pc level widely seen as the point of no return. The euro weakened to a near seven-month low against the dollar, falling 1.2pc to $1.3631. Sterling fell to a nine-month low against the dollar. Greece must demonstrate that it can hit its deficit reduction targets but the deeper-than-expected recession, sluggish privatisation programme and the authorities' failure to collect taxes is jeopardising its efforts. Proposing roughly 100,000 job cuts by 2015, Mr Traa said: "This will inevitably require the closure of inefficient state entities as well as reductions in the excessively large public sector workforce and generous public sector wages, which in some cases are above those of the equivalent private sector workers." Rejecting a new property tax, he added: "This will neither be economically or politically sustainable." Better would be a "much stronger resolve to tackle the problem of tax evasion". Mr Venizelos accepted that Greece had "delayed" major structural reforms and that the tax collection system was ineffective. Preparing the country for more austerity, he said: "We cannot go forward without the true implementation of major structural reforms." 
Access Investments-Building Awareness - European Union-ROMANIA
Tuesday, September 20, 2011
Signs of stress were once again evident in the bond markets on fears the crisis would rapidly spread, with yields on Italian and Spanish government debt climbing closer to the dreaded 6pc level widely seen as the point of no return. The euro weakened to a near seven-month low against the dollar, falling 1.2pc to $1.3631. Sterling fell to a nine-month low against the dollar. Greece must demonstrate that it can hit its deficit reduction targets but the deeper-than-expected recession, sluggish privatisation programme and the authorities' failure to collect taxes is jeopardising its efforts. Proposing roughly 100,000 job cuts by 2015, Mr Traa said: "This will inevitably require the closure of inefficient state entities as well as reductions in the excessively large public sector workforce and generous public sector wages, which in some cases are above those of the equivalent private sector workers." Rejecting a new property tax, he added: "This will neither be economically or politically sustainable." Better would be a "much stronger resolve to tackle the problem of tax evasion". Mr Venizelos accepted that Greece had "delayed" major structural reforms and that the tax collection system was ineffective. Preparing the country for more austerity, he said: "We cannot go forward without the true implementation of major structural reforms." 
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European stock markets followed Asian stock markets lower after Italy's rating was cut by one notch due to weakening economic growth prospects and higher-than-expected levels of government debt.
London's FTSE 100 index dropped 0.74pc to 5,220.64 points, Frankfurt's DAX 30 lost 0.7pc and in Paris the CAC 40 shed 0.7pc. Earlier Japan's Nikkei 225 index fell 1.6pc and Australia's S&P/ASX 200 dropped 1pc.
The news came after panic gripped global markets as a fresh showdown over Greece renewed fears that the eurozone will be plunged into crisis.
The rating for Italy, which has Europe’s second-largest debt load, was lowered from A+ to A, S&P said in a statement. The agency said the country's net general government debt is the highest among A-rated sovereigns, and now expects it to peak later and at a higher level than it previously anticipated.
“In our view, Italy’s economic growth prospects are weakening and we expect that Italy’s fragile governing coalition and policy differences within parliament will continue to limit the government’s ability to respond decisively to domestic and external macroeconomic challenges,” S&P said in a statement. "The measures included in and the implementation timeline of Italy's National Reform Plan will likely do little to boost Italy's economic performance, particularly against the backdrop of tightening financial conditions and the government's fiscal austerity program."
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