Monti warns euro crisis threatens EU as a whole

[Teh One Who Knocks]

By JUERGEN BAETZ | Associated Press


BERLIN (AP) — Italy's prime minister has warned that the eurozone's sprawling debt crisis has created resentment amid the bloc's nations, which could ultimately trigger a breakup of the wider European Union.

Mario Monti told German news magazine Der Spiegel in an interview published Sunday that eurozone tensions over the past few years "bear the traits of a psychological dissolution of Europe," adding that Europe "must work hard to contain it."

The debt crisis started in Greece more than two years ago, and soon engulfed Ireland and Portugal, with all three eventually needing to be bailed out. Spain recently applied for an aid package to rescue its troubled banks, and Italy, the eurozone's third-largest economy, has also been hit hard by rising borrowing costs on its government debt.

Asked about a strengthening in resentment between the allegedly profligate southern European nations and the bloc's thrifty northern members, Monti told Der Spiegel "it is very alarming, and we have to fight against it."

"Yes, there is a front line in this area between north and south, there are reciprocal prejudices," he said according to the interview's German translation.

An Italian newspaper this week run a front page decrying alleged German domination of Europe, showing an image of Chancellor Angela Merkel — often criticized for insisting on austerity measures and fiscal discipline in the crisis-hit nations — alongside the headline "Fourth Reich," alluding to a new generation of Adolf Hitler's Nazi regime.

German media, in turn, have often criticized Greece and other southern nations, accusing them of failing to live up to their financial commitments to the 17-nation Eurozone. Sunday's edition of Germany's top news website Spiegel looked at Italy's changing view of Germany, and how the eurozone crisis has strained friendly ties.

Monti insisted the 17-nation currency's disintegration would "destroy the founding of the European project."

"Therefore it is the prime task of the nations' leaders to explain to their citizens Europe's real situation and not give in to old prejudices," he was quoted as saying.

Monti, a former EU commissioner who now leads a government of technocrats, is lobbying for bolder political steps and help from the European Central Bank to counter the crisis, but Germany and others reject some of the proposed rescue measures.

He is set to meet Merkel, the leader of Europe's biggest economy, later this month in Berlin.

Meanwhile, Romano Prodi, a former Italian prime minister and president of the EU Commission, urged Germany to show "true leadership" in steering the continent through the crisis, saying the bloc's biggest economy has the duty "to lead Europe toward a better future."

According to text excerpts of an op-ed in Monday's edition of Germany's top-selling tabloid Bild, Prodi warned that "the confrontational debate between those receiving and those giving has already become common and destroys the founding walls of the European idea."

If Germany fails to lead through the crisis, it "would be the political end, for Europe and for Germany," he insisted, urging Berlin to present a "clear action plan to achieve a democratic, federally structured Europe."

[KevinD]

Boo fucking hoo...I guess "One World Order" isn't working out so well after all. Imagine that. Hey, let's get on the "globalization" train before it derails. Oh wait, too late..

[FBD]

Yeah, like we're gonna fall for the 3 card monti. ha!

[Arkady Renko]

well duh, of course the current debt crisis threatens the existence of the EU as a whole, because people in the northern countries are becoming increasingly aware of the fact that places like italy and greece in particular have syphoned off hundreds of billions of euros already, while still building up mindblowing deficits. Now that the shit hit the fan, they expect us to pick up the bill for them (again). And when Mrs. Merkel has then enrve to ask at least for a lukewarm commitment to market reforms in exchange for massive aid payments and guarantees, they label her Adolf 2.0 - I think we're done here.

The best bit from the Monti interview isn't even in the article: He seriously called upon the EU governments to stop asking the opinion of their national parliaments regarding the bailout efforts because this would hinder procedures a great deal.

[Southern Belle]

well duh, of course the current debt crisis threatens the existence of the EU as a whole, because people in the northern countries are becoming increasingly aware of the fact that places like italy and greece in particular have syphoned off hundreds of billions of euros already, while still building up mindblowing deficits. Now that the shit hit the fan, they expect us to pick up the bill for them (again). And when Mrs. Merkel has then enrve to ask at least for a lukewarm commitment to market reforms in exchange for massive aid payments and guarantees, they label her Adolf 2.0 - I think we're done here.

The best bit from the Monti interview isn't even in the article: He seriously called upon the EU governments to stop asking the opinion of their national parliaments regarding the bailout efforts because this would hinder procedures a great deal.
Without knowing much about the EU, this is just what I was thinking. The failing countries want Germany (and others) to bail them out while they continue being irresponsible?

[Arkady Renko]

to put it in a nutshell, yes. mind you, Germany has a massive debt/deficit problem as well, but since the late nineties the various governments here have at least begun to reduce deficts gradually and in a few years an overall ban of public deficits will kick in. And the german economy is pretty competitive and getting better all the time. Subsidies for east germany will run out five years from now, freeing up further resources. So there is little to no doubt that Germany will be able to pay back its own debt as scheduled/promised. you could say we hit the brakes just before it was too late, making quite a few sacrifices in the process.

Markets apparently honour that by lending the german treasury money practically free of interest because it's considered a safe haven. Seeing how germany has a history of making considerable financial concessions to the other EU countries in order to advacne integration, they apparently expect us to do it again, even though the stakes are about 100 times higher than ever before.

[Acid Trip]

Without knowing much about the EU, this is just what I was thinking. The failing countries want Germany (and others) to bail them out while they continue being irresponsible?

Yes.

Anyone with half a brain knew the EU would fail. Every state in the United States had to give up it's sovereignty to join. Texas was even it's own country before becoming a state. The only possible way for the EU to work was for every country to give up it's sovereignty (and military) and trade it for a true Federal/State system.

None of that happened so the experiment was doomed to fail.

[Arkady Renko]

Yes.

Anyone with half a brain knew the EU would fail. Every state in the United States had to give up it's sovereignty to join. Texas was even it's own country before becoming a state. The only possible way for the EU to work was for every country to give up it's sovereignty (and military) and trade it for a true Federal/State system.

None of that happened so the experiment was doomed to fail.

I don't think the EU as a whole is doomed to failure, it does need profound reforms though.

The monetary union on the other hand might well be past the point of no return. Neither Italy nor Greece nor Belgium for that matter should by rights have been admitted in the first place. Their debt load and deficit rates were much too high. On top of that, there are no safeguards in place that might prevent or sanction irresponsible fiscal policies in the member countries efficiently. This combined with the fact that Greece and the latin countries have a long history of artificially boosing their competitive position by allowing inflation and devaluation of their currency was a recipe for disaster. It pains me to say that it was the german government under Schröder which broke the stability pact first, thus providing the other countries with an excellent excuse for letting the reins slack as well. Ironically, the Schröderian budget deficit excesses were in no small part caused by the intial cost of the reforms that our current stable economy is based on.

[Acid Trip]

I don't think the EU as a whole is doomed to failure, it does need profound reforms though.

The monetary union on the other hand might well be past the point of no return. Neither Italy nor Greece nor Belgium for that matter should by rights have been admitted in the first place. Their debt load and deficit rates were much too high. On top of that, there are no safeguards in place that might prevent or sanction irresponsible fiscal policies in the member countries efficiently. This combined with the fact that Greece and the latin countries have a long history of artificially boosing their competitive position by allowing inflation and devaluation of their currency was a recipe for disaster. It pains me to say that it was the german government under Schröder which broke the stability pact first, thus providing the other countries with an excellent excuse for letting the reins slack as well. Ironically, the Schröderian budget deficit excesses were in no small part caused by the intial cost of the reforms that our current stable economy is based on.

The monetary union was the #1 reason behind the EU experiment. The EU could continue without a unified currency but would all the effort be worth it?

My answer is no.

[FBD]

let's get fking real - ponzi was the #1 reason for the euro experiment - ponzi is the #1 reason for the existence of central banks.

and here we laughed at Office Space - when anything remotely "TBTF" is doing exactly what Peter Gibbons thought of as a little joke-scheme.