The Italian Prime Minister Mario Monti and the European central bank president Mario Draghi have called for Germany to ease its stance on austerity and criticised Angela Merkel for allowing the crisis to drag on.
A series of conferences, meetings and a four way telephone call with president Obama allowed the two Mario’s ample opportunities to get the boot in against the German leader. Monti told a conference in Brussels that he was a keen admirer of German style budgeting but that Merkel’s vision and desire to maintain an unbalanced stable economy will lead to disaster.
“Countries that are at the core of the system and which have had the huge merit of instilling the culture of stability to the European Union in the first place, most notably Germany, should really reflect deeply but quickly,” Monti said via video link to the Brussels conference. “Europe should really accelerate the efforts, as the European Commission is doing, in order to limit the contagion.”
Draghi meanwhile told a European parliament committee in Brussels; “That without a more aggressive stance by policy makers the euro is being shown now to be unsustainable unless further steps are being undertaken. It isn’t my job to make up the failures of policy makers. It’s not our duty; it’s not in our mandate to fill the vacuum left by the lack of action by national governments on the fiscal front, on the structural front, and on the governance front,”
The comments yesterday came the day after the European Commission proposed European-financed bank recapitalizations and a timetable for euro bonds. Those ideas were rejected by the Germans, Europe’s biggest economy and the chief underwriter of 386 billion Euros ($477 billion) in aid offered since 2010.
Elsewhere Mario Monti was taking part in telephone conference call with the US president Barack Obama and joined forces with the new French President Francois Hollande in ganging up on Merkel. The US president has been critical of European leaders for failing to take control of the spiralling crisis and called for a focus on growth. Hollande and Monti urged the German leader to ease its stance on allowing the euro bailout fund to directly support struggling banks.
“People are actually working on finding ways that the ESM could be used to recapitalize banks,” Draghi said. “The issue is not so much the use of ESM money to recapitalize banks but whether this could be done directly without having to go to governments.”
Merkel is facing more and more isolation as other European leaders are beginning to realise that the current situation is benefitting Germany at the expense of the other 16 member nations. At home Merkel is under a state of political siege as her party suffered heavy defeats in elections in Germany’s largest state.
Merkel is only one of five euro leaders to remain in power since the outbreak of the crisis. If the pressure continues to pile up and she doesn’t ease her stance then there’s a good chance she will be going the same way as her pal, Mr Sarkozy.
The Pound to Euro exchange rate is currently trading at 1.241
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