EU: Desperate [Italian PM] Monti needs Merkel summit deal to stop revolt at home

The Telegraph ^ | 6/21/2012 | Ambrose Evans-Pritchard

[bruinbirdman]

Italy's technocrat government risks a parliamentary mutiny unless premier Mario Monti can secure major concessions from Germany at a crucial summit of the eurozone's Big Four powers in Rome on Friday.

"Monti is desperate. Reform fatigue has breached breaking point," said a top Italian official. "There is a feeling here that the euro is basically dead already. Unless Germany offers a road map out of this crisis, Monti is not going to be able to hold it together much longer."

The main Left and Right parties have until now backed Mr Monti's fiscal squeeze – a net tightening of 3.2pc of GDP this year – and radical reform of pension and labour markets.

The implicit trade-off was that Brussels and the European Central Bank would in return intervene to keep the bond vigilantes at bay, if necessary. Germany has so far blocked such action. Yield spreads of 10-year Italian bonds over German Bunds neared a record 500 basis points last week.

Party leaders fear an electoral massacre akin to the PASOK defeat in Greece if they back further austerity with no reward. Dissidents are near open revolt.

"We will back Monti in spite of difficulties until the summit: after that it will depend on Angela Merkel," said Angelino Alfano, secretary-general of the dominant Peoples of Liberty Party (PdL).

He said refusal to activate the ECB as a lender of last of resort is the cancer eating away at the system. "Mr Monti, tell Merkel that if Germany continues to act as it is, the Italian parliament could react badly," he said

The soft-spoken Professor Monti – flanked by French president Francois Hollande and Spanish premier Mariano Rajoy – is unlikely to be so blunt. Yet he has lured German Chancellor Angela Merkel into a Latin ambush, symbolically staged in the

[bruinbirdman]

The Victory of Berlin
Corriere della Sera, Milan

[bruinbirdman]

"to cap the borrowing costs of "virtuous" countries shut out of the bond markets due to contagion, without having to request a formal rescue "

Operative word, "virtuous". Eh, eh, eh.

Yet, we hear Spain will formally ask for a bailout Monday.

yitbos

[rigelkentaurus]

if Germany had any courage, which they do not have, they would just reissue the Deutsch Mark for their own use, and the let the rest keep the Euro and fix their own problems.

[MrEdd]

We really won't know if Berlin is victorious until after the war.

Idiots who not think there will be war are of same caliber as the idiots who thought they were not on the brink of war in the spring of 1939. They may be chemists or lawyers or engineers or doctors, but they blind themselves to the obvious with dire consequences.

Afterward many of them never lived it down. Which was as it should be.

[tennmountainman]

I wonder when the German people will have enough of carrying
the water for these other socialist EU countries.

[bruinbirdman]

"they would just reissue the Deutsch Mark for their own use"

The euro is virtually a foreign currency for everyone in the EZ.

yitbos