Written by Tendenzias

Italy has paid dearly for the sinking of the crisis in the euro area

  Investors were disappointed by the results of the mini-summit in Germany, France and Italy. The Italian government bond yields rose to record levels. On Friday Italy paid dearly for the stagnation of the crisis in the euro zone borrowing rates that have risen to record levels in a matter of debt, following a mini-summit in Berlin, Paris and Rome, which has disappointed the markets. The Italian government bond yields in six months jumped to 6.504% versus 3.535% in a similar operation on Oct. 26 to two years while the rates are increased to 7.814% versus 4.628%, unheard of since the creation of the euro area. These levels are considered unsustainable over time to the peninsula flooded with a huge debt of around 120% of its GDP. The Treasury, however, managed to collect, as expected, 10 billion euros. The market tensions have made the balance of the debt “precarious” and “feed the doubts” about its solvency, acknowledged today the Governor of the Bank of Italy, Ignazio Visco, underlining the urgent need to revive growth in a down. Italy is facing enormous challenges. In this context of maximum tension with the European financial centers in the red, Italy hosted the visit of European Commissioner for Economic Affairs Olli Rehn, as part of a monitoring mission of the Italian public finances. “Italy is facing enormous challenges,” but the recovery of growth and fiscal consolidation goals are “achievable”, said Rehn, during a hearing in the Italian Parliament. Arriving in the Italian capital with a busy schedule, the visit of the Vice President of the European Commission will include a meeting with new Prime Minister Mario Monti, the super-Minister of Economic Development Corrado Passera, the Minister of Labour and Elsa Fornero number two of the Bank of Italy, Fabrizio Saccomanni. For Brussels, as the International Monetary Fund (IMF), whose first mission is scheduled to arrive in Rome at the end of the month, the monitoring of compliance with the budgetary commitments of Italy and the implementation of structural reforms, has promised to revive growth down. At the head of the country for less than two weeks, Mario Monti said on Thursday during a mini-summit in Strasbourg to the French president Nicolas Sarkozy and German Chancellor Angela Merkel that Italy would “do its duty” and take on the objective of a balanced budget in 2013 – a goal that requires the rapid adoption of new austerity measures. Addressing the pension reform The draconian austerity plans adopted in July and September will not be enough when in fact the latest statistics (consumption, industrial production) has fueled fears of a recession in the economy which is third-largest in the euro area. Faced with the challenge of growth, Mario Monti has to go ahead with pension reform and labor market and the liberalization of the Italian economy in order to inject greater competition. But investors were disappointed by the mini-summit in Strasbourg on Thursday and still do not see the end of the tunnel. While they expected a change in the German position to allow the European Central Bank (ECB) to buy the heavy debt problems, Angela Merkel is not sold on this point, despite pressure from France. The Chancellor also reiterated his opposition to Eurobonds, but got the approval of France to a revision of the EU treaties to enhance budgetary surveillance. Source: Le Figaro  

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