Dal FT
Last updated: August 21, 2011 7:07 pm
Merkel defies pressure on debt crisis
By Gerrit Wiesmann in Berlin, Jennifer Thompson in Paris and Kerin Hope in Athens
Angela Merkel on Sunday urged Europe to stand firm in the face of market pressure and the “dramatic crisis” gripping the eurozone, insisting the solution was for states to slash public debt and boost competitiveness.
“Politics cannot and will not simply follow the markets,” Germany’s chancellor said, repeating her refusal to countenance funding indebted nations with a bond guaranteed by all members of the single currency bloc.
“The markets want to force us into doing certain things, and that we won’t do,” Ms Merkel said, shrugging off last week’s gyrations in equity and bond markets.
Her remarks came as a leading French banker warned that anxiety swirling around European banks could continue for months to come.
“Nervousness around banking stocks could last at least until the beginning of November,” Frédéric Oudéa, chief executive of Société Générale, told a French newspaper.
Shares in European banks have slumped by more than 20 per cent so far this month amid fears over the debt crisis and slowing global growth.
US officials remain deeply concerned about Europe’s inability to resolve the crisis and the potential knock-on effects on the world economy.
Greece’s four biggest banks on Sunday stepped in to rescue a small lender and avert a run on the country’s fragile banking system. The deal to recapitalise Proton Bank was essential to prevent “creating a mood of fear with unpredictable consequences”, one banker said.
Ms Merkel was backed by Wolfgang Schäuble, her finance minister, who said the eurozone would become an “inflation community” if countries opted to sell a joint bond without first unifying their fiscal policies.
Mr Schäuble is due to meet his French counterpart François Baroin on Tuesday to discuss the crisis, including proposed remedies such as a tax on financial transactions.
With investors increasingly worried about the government debt in core eurozone countries including Italy, Spain and France, calls to issue a so-called eurobond have grown louder.
But in her most comprehensive rejection of the idea so far, Ms Merkel spoke of legal hurdles including lengthy ratification of an amended EU Treaty and possibly tricky changes to the German constitution.
“Solving the current crisis won’t be possible with eurobonds and that’s why eurobonds are not the answer,” Ms Merkel told German television.
Instead, states should continue to tackle the markets’ crisis of confidence “at the roots” by pursuing the “extremely difficult task” of improving competitiveness and growth.
“The ‘debt union’ has to be replaced by a ‘stability union,” she said. “This is a hard and arduous path, which we will not be able to avoid by means of some magic bullet, like issuing eurobonds.”
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La Merkel proprio non ci sente...
![Muro :wall: :wall:](/images/smilies/muro.gif)
Anzi, sfida pure i mercati
![Eek! :eek: :eek:](data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///yH5BAEAAAAALAAAAAABAAEAAAIBRAA7)
Qua si scende ancora per tutto il mese
Non so se prendere qualcosa short sul Dax.