11 November, 2011

More news from the madhouse

Greece has a new Prime Minister. The man who drew the short straw was Lucas Papademos, a former governor of the European Central Bank, who will presumably command some confidence in Europe. They didn’t like Papandreou because he showed signs of dabbling dangerously with democracy.

In Italy the talk in the press and in the bars is that it is a done deal that Mario Monti – recently appointed a senator for life – will head up a new technical government. Monti is famous firstly for his researches in the 1970s into banks operating under monopoly conditions and secondly for having a fairly successful stint as competition commissioner in Brussels. Berlusconi seems to be accepting Monti although his partner Umberto Bossi seems to want elections. As of this morning Berlusconi is still there.

By the end of next week there could be two countries in Europe with governments run by non-elected appointees who are former EU officials. The meeting of the Italian Senate Budget Committee was interrupted yesterday so they could consult with the EU Gauleiters officials who are in Rome.

France suffered a bit of embarrassment when Standard & Poors, the ratings agency, let it slip that it was downgrading the country’s debt, only to announce moments later that it was not. A cock-up, but a careless and dangerous one.

However France is being closely watched by the markets and the rates it has to pay compared to Germany are widening.

Both France and Germany are separately reported to be studying how a new, core Europe could emerge, but both vigorously deny it, lending the reports credibility.

Meanwhile Klaus Regling, a German who is head of the EFSF, the bailout fund, says they are having difficulty ratcheting it up to the desired level of €1 trillion (even though €2 trillion or more was what was required).

Lastly, prospects for European growth have been revised down from 1.8% to 0.5%, which means some countries will fall into recession.

And still they persist with the idea that everyone can have the same interest rate.

   

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