Home > Uncategorized > Nationalist backlash in Italy and Spain to test Mario Draghi bond plan – Telegraph

Nationalist backlash in Italy and Spain to test Mario Draghi bond plan – Telegraph

September 10, 2012 Leave a comment Go to comments

Spain’s deputy premier Soraya Saenz de Santamaria said Madrid would not be rushed. “These decisions can’t be taken overnight.”

In Madrid, Spain’s CEOE business federation called on the Spanish government to swallow its pride and request a rescue as soon as possible, saying the country is effectively in a state of “suspension of payments”.

Former Spanish premier Jose Maria Aznar said the EMU crisis had poisoned relations between North and South. “We have a situation where one country has become the hegemon, and that is Germany. This is the first time we have seen anything like this since the Second World War,” he said in Cernobbio.

The bitter clash was all too evident in press headlines on Friday. Germany’s Die Welt ran with “Markets Cheer Death of the Bundesbank”, playing on deep-seated German fears over the loss of monetary control.

Italy’s Il Giornale – owned by the family of ex-premier Silvio Berlusconi – splashed with “ECB slaps Bundesbank in the face”. Its lead story highlighted the risks for Italy if it accepts the Faustian Pact of an ECB bond rescue. “States have to renounce sovereignty and hand over the keys to the house to European bankers, who will obviously impose heavier sacrifices,” it said.

Mr Roubini said the eurozone is already disintegrating, with de facto capital controls as German regulators prevent Italy’s banks bringing money home from German subsidiaries.

It is still unclear what the exact terms of any deal for Club Med states might be. With youth unemployment surging to 54pc in Spain and 35pc in Italy, austerity is already threatening democratic cohesion.

For now markets have accepted that the ECB bond plan unveiled by Mario Draghi on Thursday, has greatly reduced the “tail-risk” of sovereign defaults. Yields on Spanish 10-year bonds have fallen 150 basis points this week, dropping to 5.74pc on Friday.

Mr Aznar, the leading intellectual force of Spain’s ruling Partido Popular, said large parts of the middle class are “disappearing” in the crisis countries while the social welfare pillar of post-War Europe is crumbling before our eyes.

The Spanish statesman said the push for fiscal and political union to hold the euro together is deeply misguided. “It is a very serious mistake to try to destroy the nation states. You cannot go against the cultural beliefs of the people and the forces of history,” he said.

“A United States of Europe is an impossble idea.”

via Nationalist backlash in Italy and Spain to test Mario Draghi bond plan – Telegraph.

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