World

Italian PM: It’s Now or Never for the Eurozone

Italian Prime Minister Mario Monti Warns EU Leaders Have One Week to Save Eurozone

Italian Prime minister Mario Monti. (AP Photo/Mauro Scrobogna, Lapresse)

Italian Prime Minister Mario Monti on Thursday warned of a disastrous scenario if Europe‘s leaders fail to craft a meaningful solution to the EU’s intensifying economic woes at next week’s summit, The Guardian reports. However, the breakdown and ultimate dissolving of the Eurozone would likely result in more political than economic consequences, he said.

Regardless, Monti’s warning only reinforces how fragile Europe is right now, hinting it may be on the brink.

Monti told The Guardian and other European news outlets that if leaders are unsuccessful, “there would be progressively greater speculative attacks on individual countries, with harassment of the weaker countries,” seemingly asserting that the union would start to attack itself.

The attacks would be focused on countries who refused to adhere to EU guidelines, as well as countries like Italy who played by the rules but racked up piles of debt, Monti told The Guardian.

Next week’s summit will reportedly focus on addressing long-term plans for tightening banking agreements between countries in an attempt to strengthen the banking system that took a hit after bailouts for Greece, Ireland and Portugal didn’t work out as great as leaders hoped.

Italian Prime Minister Mario Monti Warns EU Leaders Have One Week to Save Eurozone

European Union (File photo)

“A large part of Europe would find itself having to continue to put up with very high interest rates that would then impact on the states and also indirectly on firms. This is the direct opposite of what is needed for economic growth,” the Italian leader cautioned.

The Guardian has more of Monti’s potential apocalyptic prediction:

Outlining the result of a failure at the talks, Monti said that, faced with creeping economic paralysis, “the frustration of the public towards Europe would grow”, creating a vicious circle. “To emerge in good shape from this crisis of the eurozone and the European economy, ever more integration is needed,” said Monti. Yet, if the summit failed to resolve the problems quickly, “public opinion, but also that of the governments and parliament… will turn against that greater integration”.

Monti said he could see the beginnings of the process “even in the Italian parliament, which has traditionally been pro-European and no longer is”.

He made his remarks hours after his predecessor, Silvio Berlusconi, acknowledged that his party had bled support because of its backing for the Monti government‘s unpopular budgetary measures and spoke openly for the first time of the electoral advantage it could derive from torpedoing Monti’s non-party cabinet of technocrats.

Monti signalled that the key eurozone leaders were working on a plan designed to halt the spread of debt contagion while satisfying Germany’s refusal to sanction financial irresponsibility. The plan, he said, was one of the “absolutely necessary” outcomes of next week’s summit.

The first outcome, he said, would be a clear sign of the eurozone’s willingness to integrate further “in such a way that Europeans know where they’re going… [and] the markets are convinced that, having given birth to the euro, the will [of the member states] to make it indissoluble and irrevocable is there and will be strengthened by other steps towards integration”.

He warned: “There may not be – indeed, there will not be – a fully-fledged, detailed blueprint, but there will some strong elements and a short road – I hope short, a few months – to get from there to the overall project.”

Other minimum requirements were “a fuller banking union, with advances in terms of integrated, and if possible unified, supervision”; “a European deposit guarantee” system; and the plan that will be on the table on Friday for “new market-friendly policy mechanisms” to help out countries under attack – provided they had complied with EU demands for fiscal discipline.

On Thursday figures indicating that the eurozone is slipping into recession heightened fears that Italy will follow Spain in asking Brussels for rescue funds. Only a strong performance from Germany stopped the currency union from contracting in the first quarter. But separate data showed the German private sector suffered a severe downturn in May, made worse by a slump in manufacturing.

Without recourse to strongly growing export markets, Italy can expect to see its growth hit for another year, analysts said.

Monti said the proposed new mechanism would kick in “when there is a recognition by the European authorities of respect for the rules on public finance and structural reforms”. Making intervention conditional on good behaviour could offer a way of providing relief for countries like Italy and Spain, while meeting German demands for fiscal discipline.

Monti avoided giving details but said he was “very favourable” to the purchase of the bonds of countries under attack. The present system, of assistance to the banking sector by way of the state, led to an increase in public debt that raised the yields – and cut the value – of government bonds, which in turn weakened the finances of the banks, creating “a disagreeable spiral… That is why measures to de-couple this are being studied”, he said.

The Guardian notes that the U.S. economy has also felt the effects of a lagging European Union along with China, which posted its eighth consecutive annual drop in production.

Many experts have long predicted that the collapse of the European Union would undoubtedly send economic shockwaves that reach the U.S. and other countries across the world.

The Italian prime minister is reportedly set to meet with Germany’s Chancellor Angela Merkel of Germany, French Socialist President Francois Hollande, and Spanish Prime Minister Mariano Rajoy ahead of next week’s meeting in a last-ditch effort to finalize a game-plan to save the Eurozone, and essentially the rest of the world’s economies.

Comments (29)

  • singray
    Posted on June 22, 2012 at 10:03pm

    Our Greece is California. With the other blue states to follow. You know the bailout for them will come. And you’ll see the same kind of protests when the other States talk Austarity. What will happen when Texas gets in a fight with the Federal Gov’t about their citizens Federal Tax Dollars going to Californians that can retire earlier and with greater benefits then Texans. This is going to get ugly.

    Report Post »  
  • tckid17
    Posted on June 22, 2012 at 2:50pm

    Maybe they could switch from the Eurozone to the Calzone, with Gov. Jerry Brown giving the full faith and credit of the state of California.

    Report Post »  
  • OneTermPresident
    Posted on June 22, 2012 at 10:44am

    The EU should never have been created, much like the UN. They‘re both massive failures that strayed far from they’re original intents and have been infected with radicals.

    Report Post » OneTermPresident  
  • ALL4FREEDOM
    Posted on June 22, 2012 at 7:16am

    Memo to Monti: YA THINK???

    Report Post »  
  • lukerw
    Posted on June 22, 2012 at 6:38am

    Will someone Please send him: The Italian version of the Game of MONOPOLY!

    Report Post » lukerw  
  • spikebu
    Posted on June 22, 2012 at 5:08am

    Hey, Monti. Haven’t you ever heard of Dominoes? Read up. You are the next one to fall. Is France after that?

    Report Post »  
  • teacherskj
    Posted on June 22, 2012 at 4:32am

    What was revealing was how utterly discombobulated Obama seemed to in Mexico City trying to explain how “hopeful” he was that the European countries work out their differences. Yet we all know where his precious socialist countries are headed and there was nothing positive he could actually say that was good about any of them. Sort of like a used car salesman selling his Edsel . It is a car. But it’s very old and not a lot of people can afford to buy the old antique any more.

    Report Post »  
  • The-Monk
    Posted on June 22, 2012 at 1:29am

    Perhaps Italian Prime Minister Mario Monti would just settle for a $1000 pizza and a one way ticket to Greece?

    The 2 things he seems to love the most….

    Report Post » The-Monk  
  • rickc34
    Posted on June 22, 2012 at 1:27am

    Europe needs to stand on their own we have our own problems.

    Report Post »  
    • lukerw
      Posted on June 22, 2012 at 8:30am

      The Bilderberg Group, Concil of Foreign Relations, and Trilateral Commission… desired that the US & Europe be Tied together… justified as preventing Competition and War. So much for Secret Organizations… and their lapdog US Presidents!

      Report Post » lukerw  
  • valleyfever
    Posted on June 22, 2012 at 1:06am

    First order of business is to get rid of the socialists. If people keep voting them in as they did in France isn’t the outcome sort of predictable?

    Report Post »  
    • 13th Imam
      Posted on June 22, 2012 at 7:31am

      There would be few people left in Europe if the socialists were gotten rid of.

      Report Post » 13th Imam  
  • Apple Bite
    Posted on June 22, 2012 at 12:19am

    If the UK only had better sense….
    One thing is for sure, Merkel ain’t kidding, not one bit. And that’s a good thing. If only the other Anti-Austerity countries had the guts to stand alone and be counted.

    Report Post » Apple Bite  
    • Free2speakRN
      Posted on June 22, 2012 at 6:16am

      Europe’s Socialism failure is creating a strong desire for National Socialism in both Germany, who is doing good comparably to the rest, and Greece, who is one of the countries doing bad compared to the rest. The point is Germany is not happy about bailing out countries who want to retire earlier than the people have to in Germany. At this pace, the Neo-Nazism is going to rise. That is, that being preferred, being surrounded by Socialism, as opposed to becoming what America used to be, with freedom, and free trade being the higher way.

      Report Post »  
  • Mikev5
    Posted on June 22, 2012 at 12:11am

    It’s a race as to who folds first this whole fiasco has been a gigantic game of poker the question is who will fold first whoever folds first is the big looser and it will be the EU we are way stronger than they think and more dedicated to the American way of life with them it’s the money they started this money game with the EU for control of the money we all saw it coming it was a poker game from the day the EU started they were gambling they could out bid us and brake our bank first but we are determined to be the winner so we up the stakes then they up the stakes but its bust time EU

    Report Post » Mikev5  
    • Mikev5
      Posted on June 22, 2012 at 12:19am

      So many just don’t see this the way I do but the money people know oh yes they know if the EU can just hold out they just may break our backs but you know what their banks are empty no more money to up the bid the game is almost finished and they know it they are at a massive bluff point but we stay cool and just nod as if ok what next.

      Time to see the final hand who was bluffing USA or EU

      Report Post » Mikev5  
  • OTBoxer
    Posted on June 22, 2012 at 12:05am

    The only thing that can save the non-pol Euros, Yanks, etc, is the book Democracy-The God That Failed!

    Report Post »  
  • capitalismrocks
    Posted on June 22, 2012 at 12:04am

    The “Euro” was a disaster from the get-go, to have all those countries tied together and then to have one or two fail and just drag all of the others down was suicide, this is why Europe will always follow and never lead, they are called “the old country” for nothing…. Socialists and psuedo-communists, they’ll never learn.

    Report Post » capitalismrocks  
  • ltdan
    Posted on June 22, 2012 at 12:02am

    One, two, three, pull! Just pull the band off as fast as you can, it’s going to hurt but the pain will go away. They are making it worst by prolonging the Inevitable. Let the Euro fail now before they/we pump billions into a failed utopia dream.

    Report Post »  
  • abbygirl1994
    Posted on June 21, 2012 at 11:45pm

    To the Italian PM.. Its never!! Sit back or run.. the Eurozone will fail.. and you can sit back and watch the chaos, but really you need to run like hell!

    Report Post » abbygirl1994  
  • Lord_Frostwind
    Posted on June 21, 2012 at 11:25pm

    European Union Strategy: Germany will save us!
    …
    …
    …
    I hope that the irony of the current situation is not lost upon the people of Europe. Regardless, I seriously doubt that they will be saved, if I were the Germans and the rest of the nations were refusing to follow my instructions when I am providing them the funds to survive, I’d tell them where to shove it and abandon the faltering alliance. Better to take my licks than to go down with the ship.

    Report Post » Lord_Frostwind  
  • Snowleopard {gallery of cat folks}
    Posted on June 21, 2012 at 11:17pm

    So how soon is it going to commence in spades? A week, this weekend or when?

    Report Post » Snowleopard {gallery of cat folks}  
  • Rayford
    Posted on June 21, 2012 at 11:16pm

    Most of us have made a course of dominos or a house of cards in our time. Most of the time while making these things, part of it falls. Sometimes it takes out a small part of it or all of it.
    The small part has collapsed a few times and been put back time and time again.

    Now the whole thing is gonna come down. Just a matter of time, and I dont think there’s much of that left.

    Report Post »  
  • BigDaddyTex
    Posted on June 21, 2012 at 11:15pm

    I dunno….. Is it just me, or has anyone else heard this “we only have a week until the Euro Zone apocalypse!” about a DOZEN TIMES in the last two years or so?

    Report Post »  
    • Rayford
      Posted on June 21, 2012 at 11:23pm

      I have heard the same thing, but they have managed to patch up the raft to let it sail one crisis to the next. You can see things have declined further each time it has been patched. Compare the euro zone 2 yrs ago to today, and it will be quite clear where it is heading.

      They are running out of patches.

      Report Post »  
    • broker0101
      Posted on June 21, 2012 at 11:33pm

      Hasn’t Glenn Beck bee insisting the the total collapse of the entire world economy has already begun? At least he’s a smart enough salesman that he never gives any actual timeline. (P.S. Those were what are called “rhetorical questions” – meaning, I already know the answers.

      Report Post » broker0101  
    • CatB
      Posted on June 21, 2012 at 11:40pm

      i think this is a lot like our own housing market and banks .. the more they “patch” the worse it is going to be in the end.

      Report Post »  
    • lukerw
      Posted on June 22, 2012 at 8:24am

      Even a Pure Guess… has a Percentage chance of being Correct — Statistically, No One is Wrong All the Time… unless they Deny their ESPower and Negate what was provided.

      Report Post » lukerw  

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