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: 278

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

Doc Vega posted a blog post

In Memory of Those Who Served

 Bullets flew and ricochetedI was on that hill todayMy Company commander got blown awayI was on…See More
21 hours ago
Doc Vega posted blog posts
Tuesday
Doc Vega commented on Doc Vega's blog post Plausible Explanation Behind Recent Cryptid Sightings in the Wild!
"cheeki kea I was wrong Emperor Penguins are big and powerful but still alive but this,  A size…"
Tuesday
Doc Vega commented on Doc Vega's blog post Plausible Explanation Behind Recent Cryptid Sightings in the Wild!
"Cheeki kea here's another that they say there have been modern sightings of!  The name of…"
Tuesday
Doc Vega commented on Doc Vega's blog post Plausible Explanation Behind Recent Cryptid Sightings in the Wild!
"cheeki kea, did you ever hear of the giant Imperial Penguins? They were about 6 feet tall and could…"
Tuesday
Doc Vega commented on Doc Vega's blog post Plausible Explanation Behind Recent Cryptid Sightings in the Wild!
"cheeki kea I do not think these giant two legged birds would need to have a bad attitude as long as…"
Tuesday
Olivia Brooks updated their profile
Tuesday
John Miller was featured
Tuesday
tjdavis's 2 blog posts were featured
Tuesday
Zfort Group's blog post was featured
Tuesday
Doc Vega's 6 blog posts were featured
Tuesday
Burbia commented on tjdavis's video
Thumbnail

“What’s His Motive?” - Inside The Mind of George Soros

"Trump calls for George Soros and son to face federal…"
Tuesday
Burbia commented on tjdavis's photo
Tuesday
Profile IconSeeta Sathe and Olivia Brooks joined 12160 Social Network
Tuesday
tjdavis posted a video

Mossad, Terrifying CIA Technology, Blackwater & The Most Secret CIA Unit | John Kiriakou

John Kiriakou served 15 years in the CIA as a Case Officer (Spy) and as CIA's Head of Counterterrorism Operations in Pakistan where he lead the raid that cap...
Monday
tjdavis posted a photo
Monday
tjdavis posted a video

A Critique of the Tavistock Institute - The Mother Of All Conspiracy Theories

An examination of the Tavistock Institute, a theory which seeks to explain how Western societies have been brainwashed by a cabal of social scientists and th...
Sunday
tjdavis posted a video

“What’s His Motive?” - Inside The Mind of George Soros

In this short clip, Patrick Bet-David, Sebastian Gorka Adam Sosnick, and Tom Ellsworth George Soros and what motivates him to do the things he does. FaceTime...
Aug 27
Doc Vega posted blog posts
Aug 27
cheeki kea favorited Bob of the Family Renner's photo
Aug 26

© 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