By Catherine Hornby and Michael Winfrey

ROME/ATHENS (Reuters) - Italy's parliament is rushing through austerity measures demanded by the European Union to avert a euro zone meltdown, after U.S. President Barack Obama ratcheted up pressure for more dramatic action from the currency bloc.

Italy's Senate approved a new budget law on Friday, clearing the way for approval of the package in the lower house on Saturday and the formation of an emergency government to replace that of Prime Minister Silvio Berlusconi.

Obama spoke with German Chancellor Angela Merkel and French President Nicolas Sarkozy late on Thursday and also called Italian President Giorgio Napolitano, who in turn was due to speak to Sarkozy in a round of telephone diplomacy.

A German government official said there had been an "exchange of opinions" between Merkel and Obama, while Treasury Secretary Timothy Geithner demanded fast action from Europe.

"The crisis in Europe remains the central challenge to global growth. It is crucial that Europe move quickly to put in place a strong plan to restore financial stability," Geithner said in a statement following a meeting with finance ministers from the Asia Pacific Economic Cooperation countries.

After months of dither and delay, Rome appears to have got the message as bond markets pushed it to the brink of needing a bailout that the euro zone cannot afford to give.

If the votes pass smoothly, Napolitano will accept Berlusconi's resignation over the weekend and ask veteran former European commissioner Mario Monti to form a government.

Fellow technocrat and ex-European Central Bank policymaker Lucas Papademos will head a new unity government in Greece.

Berlusconi, who lost his majority in a vote on Tuesday, has promised to resign after the financial stability law is passed by both houses of parliament.

He had insisted on early elections but then softened his stance. Markets were calmed by the prospect that there would be an interim government, rather than a three-month vacuum before elections are held.

"The most important element to overcome this crisis is a very trusted and able new Italian government that can really fulfill the structural changes that are needed," ECB policymaker Ewald Nowotny told Reuters in Beijing.

The euro firmed but investors doubted whether it would climb far, given that even a technocrat Italian government might struggle to make progress on long-promised, never-delivered fiscal reforms.

Italian 10-year borrowing costs fell sharply to 6.7 percent, having hit an unsustainable 7.5 percent earlier in the week.

"We can have maybe two or three days of calm -- in inverted commas -- but nothing has really changed underneath," one bond trader said.

Spain, the euro zone's fourth largest economy, which holds elections in nine days' time, stopped growing in the third quarter, raising doubts about its ability to meet deficit reduction targets.

RELUCTANT ECB

With European leaders dithering over how to tackle the deepening crisis, pressure has mounted on the European Central Bank to act more forcefully by becoming a full lender of last resort, as the Federal Reserve and Bank of England are.

Three senior ECB policymakers on Thursday rebuffed arm-twisting from investors and world leaders to intervene massively on bond markets to shield Italy and Spain from financial contagion.

Germany Economy Minister Philipp Roesler said on Friday the ECB did not have "unlimited firepower," adding that if it opened its floodgates fully, they could never be closed again.

Germany strongly opposes the ECB taking on a broader crisis-fighting role, arguing this would compromise the independence of the bank.

The euro zone's plan for a more powerful rescue fund may also be running into trouble.

 

more

http://www.hindustantimes.com/world-news/Europe/Italy-pushes-throug...

Views: 276

Comment

You need to be a member of 12160 Social Network to add comments!

Join 12160 Social Network

"Destroying the New World Order"

TOP CONTENT THIS WEEK

THANK YOU FOR SUPPORTING THE SITE!

mobile page

12160.info/m

12160 Administrators

 

Latest Activity

tjdavis posted a video
18 hours ago
Burbia replied to Burbia's discussion Trump Receives Marching Orders
yesterday
Less Prone favorited Burbia's video
yesterday
Less Prone replied to Burbia's discussion Trump Receives Marching Orders
"Bullets can be effective in reinforcing ownership."
yesterday
Burbia posted a discussion

Trump Receives Marching Orders

Netanyahu has made 3 visits to the White house since Trump's second term as President of the United…See More
yesterday
Burbia commented on Burbia's video
Thumbnail

Ben Shapiro Just LOST HIS MIND — There's No Coming Back From This

"Omg. The Ben Shapiro voice that Luke is imitating here couldn't be any more comedic to…"
Tuesday
Burbia posted a video

Ben Shapiro Just LOST HIS MIND — There's No Coming Back From This

Get the magnesium your body needs - https://wearechange.shop/product/magnesium-glycinate/Ben Shapiro Just LOST HIS MIND — There's No Coming Back From ThisHig...
Tuesday
cheeki kea posted photos
Tuesday
Doc Vega posted blog posts
Monday
Burbia posted a video

A few reasons I don’t like jews. It’s not complicated.

These are the reasons I became antisemitic. It’s not complicated. Sure, I could go on for days, weeks, months outlining everything, but I don’t need to. This...
Monday
Doc Vega commented on Doc Vega's blog post Unusual Discoveries and Headlines
"Less Prone, Thanks Buddy! I'd like to volunteer as a historical reconstructionist! "
Sunday
Less Prone left a comment for t.me/TheIntelligenceLibrary
"Welcome to a revolutionary concept in public communication, the truth."
Sunday
pohonemas33 team is now a member of 12160 Social Network
Sunday
Less Prone favorited cheeki kea's discussion Tartaria
Sunday
tjdavis's 2 blog posts were featured
Sunday
Doc Vega's 7 blog posts were featured
Sunday
Less Prone commented on Doc Vega's blog post Unusual Discoveries and Headlines
"Some incredible pieces of history!"
Sunday
Less Prone favorited Doc Vega's blog post Unusual Discoveries and Headlines
Sunday
tjdavis posted a blog post
Sunday
Doc Vega posted a blog post

First Week of July 1947 an Inflexion Point for Humanity!

The year is 1947 and sometime around July 4th the anniversary of the birth our nation, when a…See More
Saturday

© 2025   Created by truth.   Powered by

Badges  |  Report an Issue  |  Terms of Service

content and site copyright 12160.info 2007-2019 - all rights reserved. unless otherwise noted