Posted on 04/15/2008 7:56:05 PM PDT by Fred
Silvio Berlusconi's return to power in Italy is a nightmare come true for the European Central Bank, opening the way for a Rome-Paris axis with the political muscle to force a change in monetary policy.
Silvio Berlusconi plans Paris-Rome axis to humble ECB Silvio Berlusconi does not share the EU-loyalities of the outgoing government
The billionaire politician has pledged an alliance with France's Nicolas Sarkozy aimed at humbling the bank and asserting the primacy of elected leaders over interest rates and the currency.
"A very strong euro is hurting Italy's economy. I will discuss intervening with the ECB with Sarkozy," he said.
The threat brought a sharp retort yesterday from the ECB's German governor and chief economist Jurgen Stark. "I would recommend to political leaders in Europe, newly elected and re-elected, to read the European law on the ECB," he said.
Mr Berlusconi - who is setting up a temporary office in Naples to tackle the city's long-running rubbish crisis - inherits an economy trapped in near slump conditions. The country has lost 40pc in unit labour cost competitiveness against Germany since 1995, largely due to anaemic productivity gains and an inflationary wage-bargaining culture. Yet it cannot use the old method of devaluation to claw back parity.
The International Monetary Fund forecasts growth of just 0.3pc in both 2008 and 2009, levels that are certain to cause a renewed rise in the country's national debt. Italian car sales plunged 18.8pc in March, and the Alpine lender Credito Valtellinese has just become the first European bank in living memory to miss a redemption on a callable bond - raising concerns of deeper troubles brewing in Italy's financial system. advertisement
Mr Sarkozy has repeatedly attacked the ECB's tight money policies, blaming it for causing the euro to surge 27pc in two years to a record $1.59 against the dollar. He says the ECB risks bankrupting Airbus and driving much of Europe's industry off-shore. Until now he has lacked the allies needed to impose his will.
"Politics is everything in EMU, and the re-election of Berlusconi represents a big shift in the political balance of power," said Bernard Connolly, global strategist at Banque AIG. "Spain will probably join France and Italy before too long, so you will have three of the big four eurozone countries in the same camp.
They can set 'broad guidelines' for the ECB. It is a total misperception that the ECB should not be subject to political influence."
Article 111 of the Nice Treaty gives politicians power to set a fixed exchange rate for the euro (by unanimous vote), or to shape the exchange rate (by qualified majority vote). This power gives EU ministers an indirect means to force the ECB to cut interest rates. The treaty article has never been invoked but it hovers in EU affairs like Banquo's Ghost.
Mr Berlusconi does not share the EU-loyalities of the outgoing government. Ex-premier Romano Prodi was once the president of the European Commission, the public face of the euro. His finance minster Tommaso Padoa-Schioppa was a founder of Europe's monetary union.
The last time Mr Berlusconi was in power, two ministers from his coalition partner 'La Lega Nord' called for a return to the lira to escape the constraints of the euro system. While he did not endorse the comments, he appeared to relish their effect on his enemies in Brussels and Frankfurt.
so now the Europeans dont like the Euro
ich bien confused
I’ve read other articles here about Napoli’s outrageous trash crisis. A perfect storm of corruption and incompetence.
years of literally sweeping it under the rug.
If Paris isn’t interested, maybe he could try for a Rome-Berlin Axis. But, on the other hand ... maybe he shouldn’t.
I think that Iraq itself is showing an example to countries of the world that freedom can promote true prosperity.
These principles of conservatism are now on display by example, cutting out any chance of misreporting by the mainstream media. It is hopeful and makes our liberals look all the more foolish.
Good. The ECB is setting rates according to a flawed theory, anyway.
:’)
Russia renews warning to EU over Kosovo
Tue Apr 15, 2008 1:10pm EDT
http://www.reuters.com/article/latestCrisis/idUSL15843593
Eh. Jus makin’ like dere Joisey cousins. Capische?
It’s un-effing believable. The article I read said that for fifteen or so years the corrupt city government looked the other way whilst camorra-owned low-bidders hauled the trash away to stuff it in the numerous volcanic caves and craters throughout the area. The ecological catastrophe and threat to the water supply is off the charts. My hat’s off to Berlusconi for moving his office to Napoli and taking personal charge of fixing this mess for however long it’s gonna take.
When I first read this, I thought that the bank had failed to redeem a bond that had matured; instead, after checking, what happened was that the bank did not call a callable bond as soon as it could have since it apparently would save on interest by continuing to pay on the current instrument which does not mature until 2013. (Banks May Delay Calling Bonds as Valtellinese Defers.)
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