By Gideon Rachman
“We have made Italy, now we must make Italians.” So said Massimo d’Azeglio, an Italian intellectual, just after his country’s unification in 1861. The current generation of EU politicians face a modern version of the d’Azeglio dilemma: They have made a European Union, now they must make Europeans.
By Gideon Rachman
It has been many centuries since the Mediterranean Sea was the centre of civilisation. But in 2011 the Med was back – not just as a holiday destination – but at the very centre of world affairs. This was a year of global indignation, from the Occupy Wall Street movement to the Moscow election protests and China’s village revolts. It was popular protests on either side of the Mediterranean – in Tahrir Square in Cairo and Syntagma Square in Athens – that set the tone for 2011.
So the ECB and the Bundesbank don’t want to bail-out Italy via the IMF. But could national eurozone central banks do it? They already lend to their own commercial banks through the Emergency Liquidity Assistance programmes and there is nothing to stop the IMF accepting loans from any central bank. Could this be behind Jean-Claude Juncker and Olli Rehn’s cryptic comments on Tuesday night?
Obvious huge snag: such lending would have to be OK’d by the ECB, since it ultimately stands behind all the national central banks. But if the ECB (and the Bundesbank) want to give way on their “No pasaran!” on lending to the IMF, letting the eurozone national central banks do it might be a convenient way of retreating with a shred or two of dignity intact. Read more
Mario Monti arrives to unveil his new government at the Quirinale Palace in Rome. Photo: Alberto Pizzoli/AFP/Getty Images
Welcome back to the FT’s rolling coverage of the eurozone crisis. By Esther Bintliff and John Aglionby on the world news desk, with contributions from correspondents around the world. All times GMT.
Europe’s two new technocratic prime ministers consolidated their respective grips on power today. Lucas Papademos in Greece won a confidence vote in parliament, while Mario Monti, his Italian counterpart, announced his new cabinet and was sworn in as prime minister.
19.03: We’re going to wrap up the live blog for tonight, but you can read lots more on FT.com. Here’s a quick update on today’s events:
- In Greece, prime minister Lucas Papademos won an overwhelming vote of confidence in his new interim government – 255 votes in favour, 38 against
- Charles Dallara, managing director of the Institute for International Finance, is about to meet with Mr Papademos (see our 12.15 update). The IIF has been negotiating with Greece on behalf of investors holding Greek sovereign debt
- In Italy, Mario Monti unveiled his new technocrat cabinet (see our 12.52 update, and this article) and said he would serve as both prime minister and finance minister. ”We finally have a competent government, not one of dwarves and ballerinas,” declared Antonio di Pietro, former anti-graft magistrate and head of the Italy of Values party.
- Italy’s statistics agency spooked the market by announcing that it wouldn’t be releasing preliminary Q3 GDP data
- The number of jobless in the UK reached 2.62m, a 15-year high, while the number of young unemployed topped one million for the first time since these records began in 1992
- In its November Inflation report the Bank of England revised downwards its growth and inflation forecasts, and prompted economists to predict that quantitative easing would be ramped up sooner than expected
- Mervyn King, the Bank of England governor, said he had “great sympathy” with the ECB in “not going around and buying all sorts of assets”
- Angela Merkel said Germany was prepared to “give up a little bit of national sovereignty” in the name of strengthening the wider eurozone area (see 13.44 update)
- Portugal passed its latest troika exam - or rather, the European Union and International Monetary Fund approved the disbursal of the next €8bn tranche of the country’s €78bn financial rescue package after concluding a second quarterly review of the the government’s progress with the bail-out programme (16.04 update)
- Italy’s 10-year government bond yield spent the day fluctuating around 7 per cent – and finally settling at that level, reports Dave Shellock on our markets team. Reported buying by the European Central Bank of both Italian and Spanish debt offered only limited support
Welcome back to the FT’s live coverage of the eurozone crisis and the global fallout. By Tom Burgis and David Crouch in London with contributions from correspondents around the world. All times are GMT.
Italian bond yields are back up over 7 per cent, and French and Spanish bonds are also under pressure. Stock markets are down across Europe. Meanwhile, Mario Monti – Italy’s prime minister designate – is battling to create a new government capable of dragging Italy out of the eye of the storm.
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17.59 We are wrapping up our rolling coverage – thank you for reading. But before we go, here is a quick reminder of today’s latest FT news and insights on the eurozone crisis:
- Italian prime minister designate Mario Monti will see president Georgio Napolitano on Wednesday morning to present his new government, after he received the backing of outgoing premier Silvio Berlusconi’s People of Lilverty party
- Following anaemic data on European economies today, more than three quarters of fund managers predicted Europe will slide into recession next year
- Italy’s 10-year bond yield once again soared above the 7 per cent mark and French yields hit a record spread over German Bunds, causing global markets to wobble
- US Treasury yields were close to unchanged as better-than-expected retail sales data offset safe-haven buying due to rising eurozone yields
- The Austrian coalition government, faced with rising yields on government debt and a possible downgrade, decided to accelerate the pace of spending cuts
- German frustration over Britain’s approach to the eurozone crisis was laid bare after a close ally of Angela Merkel accused the UK of selfishly pursuing its own interests just days before a meeting in Berlin between the German chancellor and UK prime minister David Cameron
By Gideon Rachman
The arrival of technocratic prime ministers in Greece and Italy has not been greeted with universal applause. Some complain that because Lucas Papademos and Mario Monti have not been elected, their appointments will simply confirm the elitist and undemocratic nature of the European project.
Mario Monti, Italy's newly appointed prime minister designate, in Rome on Monday. Photo: Pier Paolo Cito/AP
Welcome back to the FT’s live coverage of the eurozone crisis and the global fallout. By John Aglionby and Esther Bintliff in London with contributions from correspondents around the world. All times are GMT.
Are calmer waters finally visible on the horizon of the eurozone? Perhaps – for now. Mario Monti’s first full day as Italian prime minister designate will be marked by a bond auction and his efforts to form a government. A confidence debate starts in Greece on Lucas Papademos’s government. And German chancellor Angela Merkel holds her Christian Democratic Union party annual conference in Leipzig.
19.50: That’s all for now, but before we go, here’s a whistlestop tour through today’s latest FT news and insights on the eurozone crisis:
- Greece has met financial requirements for an €8bn loan payment but still has to reassure “taxpayers abroad” that it is fully committed to implementing the terms of an international bail-out, the country’s new premier told parliament on Monday.
- Understanding Mario Monti – the view from Brussels
- Three key themes that will guide Mr Monti as he attempts to pull Italy out of its sovereign debt quagmire - financial rigour, promotion of economic growth and social equity
- Angela Merkel, the German chancellor, calls for Europe to build a “political union” to underpin the euro and help the continent emerge from its “toughest hour since world war two”
- Looking ahead to tomorrow: France’s third quarter growth figures, due out on Tuesday, will be watched with more than usual concern. Here’s why.
Thanks for reading.
A screen in Hong Kong displaying the Hang Seng index's turbulent day today. Image AP
Welcome back to the FT’s coverage of the eurozone crisis and its global fallout. Curated by John Aglionby, Tom Burgis and Orla Ryan on the news desk in London and with contributions from correspondents around the world. All times are GMT.
Market reaction to events in Italy shows that the crisis is now truly global. Markets are looking for more clarity from Rome on timings, particularly of the austerity vote. Meanwhile the Greek establishment has finally settled on a new prime minister.
18.53 That’s the end of our live coverage today. See FT.com through the night for all the latest news and analysis.
18.45 Our reporting team in Italy has produced a profile of Mario Monti, frontrunner to be the next Italian prime minister:
Former European Commissioner Mario Monti at a news conference in Strasbourg in 2001 (Reuters)
Romans are already talking of the beneficial “Mario Monti impact” on Italy’s debt mountain – even before his appointment as prime minister is in the bag.
The spread between Italian and German 10-year bonds has fallen some 50 basis points since peaking at 576 on Wednesday, partly attributed to the prospect of the respected economist and former European commissioner taking over from Silvio Berlusconi to head a caretaker government.
Welcome back to the FT’s live coverage of the eurozone crisis. Run by John Aglionby, Tom Burgis and Orla Ryan on the news desk in London, with contributions from correspondents around the world. All times are GMT.
20.00: So, Berlusconi has offered to resign – but only after parliament passes an austerity package. And then, he tells Italian television, he wants elections. We’re wrapping up the live blog now: see the new stories and analysis on FT.com for developments from Rome and elsewhere through the night.
19.46: In Rome Ferdinando Casini, head of the opposition party UDC, has told reporters he is “convinced that Berlusconi understands that the current economic and political situation does not allow for a long and extenuated election campaign“.
19.40: From Milan, the FT’s Rachel Sanderson reports that after meeting the president Berlusconi returned to his residence in Rome, Palazzo Grazioli, where he has been joined by Angelino Alfano, the young Neapolitan member of his party whom Berlusconi suggested earlier this year could be his successor. Berlusconi has also been joined by Niccolo’ Ghedini, his lawyer, and members of his coalition party the Northern League, according to Italian reporters at the scene. Read more
It seems somehow fitting that the European crisis is currently centred on the two great wellsprings of European civilisation – Athens and Rome. If Hollywood were making a film about it, it could be called – “The Decline and Fall of the Roman Empire II” and sub-titled – “This time they’re taking the rest of Europe with them.” Read more
By David Oakley
A decision by ratings agency Moody’s over whether to downgrade Italy’s triple A sovereign rating is imminent. As the debacle this summer over S&P’s decision to downgrade the US illustrated, such a move could have major repercussions in the markets. So, just what is going on? How worried should we be? And might there be more downgrades to come in the eurozone?
What is Italy’s current investment rating?
Moody’s announced that it had put Italy on watch for downgrade in the middle of June. The agency gives itself a deadline of three months to make a decision, which should be in the next few days. Read more
Cometh the hour, cometh the man. I have no idea whether Giulio Tremonti, the Italian finance minister, will be able to save his country or the eurozone from a truly dreadful fate. But I am nominating him for a prize for communication and services to journalism. Hitherto, this most dramatic of stories has generally been talked about in the deadest of language. It either gets wrapped up in finance-prattle (CDOs, debt-to-GDP ratios, sovereign risk etc); or smothered in the suffocating nonsense that fills up European Union communiques (“With this decisive step …” etc etc)
Now, at last, we have somebody with a gift for language. Over the past week, Tremonti has given the world three splendid soundbites. Read more
The phrase “I hate to say I told you so” is annoyingly insincere. Normally, there is nothing people love more than saying, “I told you so.” So I will simply admit to mixed feelings in pointing out, that I wrote a column three months ago, suggesting that Italy would be sucked into the euro crisis. There were two crucial facts that led me to that conclusion. First, Italy’s debt-to-GDP ratio at 120% was already higher than that of Greece, Portugal and Ireland, at the point where they were forced to apply for help. Second, Italy’s financial position was only sustainable in a climate of very low interest-rates. And that would not last forever. Read more
In Las Vegas they call the really big gamblers – the ones whose fortunes can make or break a casino – the “whales”. For the European Union, Italy is the whale – the country whose economy and debts are so large that the fate of the single currency and the EU itself hang on its future.
Italy has a huge national debt of something like 120% of GDP. But last week, I was told by a former top official in the Italian government that Italy has done an audit of all its possessions and found that the state’s assets still outweigh its liabilities. The difficulty is that many of the state’s possessions are difficult to realise. How do you cash in on the Colosseum, for example? Read more