Euro Zone Debt Crisis

Euro Zone Debt Crisis

IT Tue, Nov 8

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  • 09:22
    Good morning, and welcome to our live coverage of the euro zone debt crisis. Eoin Burke-Kennedy here with today's main events.

    Another day and another crunch vote which threatens the very foundations of the European project. With Greece residing in political limbo, all eyes are on Italy and the fate of the Berlusconi government.

    Today's vote in the Italian parliament - to approve the public accounts for 2010 - is a make-or-break moment for the 75-year-old media magnate. Yesterday, Berlusconi denied widespread reports he was about to resign, vowing to fight on. However, he faces an uphill task with reports that up to 30 deputies have defected from his People of Freedom party.

    Yields on Italy's 10-year bonds touched another record this morning at 6.71 per cent, a level seen as unsustainable for Italy's massive debt.
  • 09:42
    This afternoon's crunch vote in the Italian parliament will take place after a debate which starts at 2.30pm (1.30pm Irish time). Berlusconi - who has survived a whopping 50 confidence votes since 2008 - will decide on his future after the ballot, according to colleagues.

    If he is defeated, he could either resign immediately or be ordered by the president to call a confidence vote. Judging by yesterday's see-sawing markets, investors would like to see the back of him. However, a political vacuum in the fourth biggest euro zone economy is hardly likely to calm frayed nerves either.
  • 09:50
    Is Berlusconi to be the second major casualty of the debt crisis in as many days?
    Is Berlusconi to be the second major casualty of the debt crisis in as many days?
  • 09:57
    Italy's pro-Berlusconi newspaper Il Giornale, owned by the prime minister's brother, ran with the headline:"I'm not leaving" over a picture of Berlusconi this morning.

    The paper compared him to Jesus and the defectors to Judas. "I want to look those who betray me in the face," the newspaper quoted him as saying.  Rome's  La Repubblica newspaper, however, said Berlusconi should read the writing on the wall after Monday's market rally on rumours that he was about to step down.
  • 10:20
    European shares rose today, partially clawing back two days of losses. Commentators say upbeat corporate news from the likes of telecom heavyweight Vodafone are helping to offset debt crisis fears but for how long?

    Although most economists say Italy is not comparable to Greece and has ample room to restructure itself on more stable fiscal path, it is estimated that it will cost an incredible €300 billion just to feed its €2 trillion debt mountain. Scary! Here's a snapshot of Europe's main bourses:  FTSE 5,576 (+65.64), Dax 6,012 (+83.32) and Cac 3,143 (+39.65)
  • 10:31
    It's incredible how quickly machinations in Italy have taken over from those in Athens. Greek leader George Papandreou today resumed talks with opposition leader Antonis Samaras in a bid to form a unity government.

    Samaras says he expects the appointment of a new prime minister within the day, according to the state-run Athens News Agency. Lucas Papademos, the former vice-president of the ECB, remains the favourite to be appointed.
  • 10:35
    A Greek orthodox priest searches for change to buy vegetables in Athens
    A Greek orthodox priest searches for change to buy vegetables in Athens
  • 10:41
    What is going to happen to the euro zone? "It would be remarkable if there weren't one or more departures, including Greece," says Michael Derks, the chief strategist at FXPro Financial Services. "When things happen, the next question is, who's next? What's dangerous isn't so much what's happening now, it's what might happen next." The deepening crisis has weakened the euro by 3 per cent since October 27th to $1.3790
  • 11:07
    EBS Building Society has just said it will to reduce its standard variable interest rate by 0.25% from December 1st. The news comes after Danske-owned National Irish Bank said it will not be passing on the ECB's latest rate reduction. Mixed news then for the country's 207,000 variable-rate mortgage holders.
  • 11:24
    Senior politician in Angela Merkel's Christian Democratic Union says Berlusconi should resign and be replaced by a leader capable of pulling Italy out of its debt misery, according to Bloomberg. Italy is a rich country and capable of tackling its problems when led by a prime minister up to the job, said Michael Fuchs, CDU economy spokesman and deputy parliamentary leader.

    The idea of a senior German government figure calling for a change of government in a neighbouring member state, let alone questioning another democratically elected leader's competence, would have been unthinkable a short time ago. The pre-crisis bonhomie has been well and truly torn apart by the financial storm. Columnist Fintan O'Toole has a provocative piece on the issue in today's Irish Times. 
  • 11:59
    British finance minister George Osborne has been vociferous in calling on euro area leaders to show the world it can stand behind its currency. One of the interesting developments of this phase of the debt saga has been cohesion of the none-euro EU countries - the ten euro "outs" as they've been labelled. The 10 states are now demanding observer status at future euro zone finance ministers' meetings.
  • 12:04
    Two developing news lines just in regarding the situations in Italy and Greece. Berlusconi's closest ally, Northern League leader Umberto Bossi, has called on the PM to bow to intense market and politcial pressure and resign. "We asked the prime minister to stand down," Bossi told reporters. He also said Berlusconi should be replaced by the secretary of his ruling People of Freedom party, Angelino Alfano.

    In Greece, Papandreou has begun an emergency cabinet meeting, suggesting negotiations with the opposition on forming a new government may be progressing.
  • 12:18
    Could this man (Angelino Alfano) be Italy's next leader?
    Could this man (Angelino Alfano) be Italy's next leader?
  • 12:31
    Bossi may just have delivered Berlusconi's head to his detractors. Most commentators seem to think the Italian PM's goose is cooked. Predicting political developments in the boot-shaped peninsula is, however, not something anyone can claim to excel at and the 75-year-old has made a career out of politcal comebacks. Nevertheless, things look pretty dire for him at this stage.
  • 12:42
    Greek state news agency is reporting that Papandreou has asked his cabinet to prepare their resignations. The move comes as Greece's two main parties, Pasok and New Democracy, continue attempts to form unity government. A government spokesman is also quoted as saying that Greek party leaders will decide "soon" who will lead a new coalition government.
  • 12:57
    It's time for a jaunt around the markets. Chief stat, of course, is Italy's borrowing costs. After hitting a record high of 6.74% this morning, the yield demanded for holding its 10-year bonds has fallen back a bit to be trading at 6.63%. The main stock-markets look like this: FTSE 5,594 (+83), Dax 6,036 (+107), Cac 40 3,163 (+59). In Dublin, the Iseq was 2,688 (+23.49).
  • 13:16
    Trying to assess the behind-the-scenes political manoeuvring in Italy brings to mind Churchill's description of Russian politics which he likened to watching two dogs fighting under a carpet. As we close in on today's crunch vote, it's still unclear how many deputies have defected from Berlusconi's People of Freedom party and which way the main opposition parties will vote.

    Most insiders suggest the opposition will abstain from voting to show up Berlusconi's lack of support but if there is so many defections, as has been reported, surely they will try and topple him.
  • 13:29
    We've just had another indication of the level of mistrust and anxiety that currently abounds within EU circles. Greece is being asked to produce a letter promising the implementation their bailout deal and have it signed by the outgoing and new Greek prime minister, the finance minister, the opposition leader and the central bank chief, according to EU sources.

    I wonder if the head of the Greek orthodox church will be asked to sign it.
  • 13:52
    Financial markets are holding their breath as Italy's parliament begins a debate on the country's 2010 public accounts which will culminate in a vote of confidence in prime minister Silvio Berlusconi.

    The vote is expected to take place at about 5pm (4pm Irish time). Despite widespread calls, including one from his close ally Umberto Bossi, for him to resign, the 75-year-old media magnate is hanging on grimly to power. Another cliff-hanger moment in Europe's long-running debt crisis saga awaits.
  • 13:58
    D-day for Silvio!
    D-day for Silvio!
  • 14:37
    Widespread unconfirmed reports that Lucas Papademos is the new Greek prime minister. State-run NET TV is running with the story that the former vice-president of the European Central Bank has got the job, without citing a source.
  • 14:50
    Finland isn't preparing to leave the euro, Prime Minister Jyrki Katainen has told the parliament in Helsinki today in response to questions from MPs lawmakers. Katainen said reorganization of debts is no "magic cure" to the sovereign debt crisis; countries must seek to balance their budgets and the "acute crisis" must be quickly resolved.
  • 15:15
    If the Berlusconi ship sinks this afternoon there are a number of likely replacements.

    Mario Monti: Widely seen as favourite and certainly the candidate the markets would most welcome. The 68-year-old economist is likely to lead a technocrat government with a mandate to push through economic reforms.

    Angelino Alfano: Said to be Berlusconi's favoured successor. At just 41, he was Italy's youngest ever justice minister before standing down in July. While in office, he crafted law to shelter Berlusconi from prosecution that was later scrapped.

    Gianna Letta: Berlusconi's cabinet undersecretary and right hand man. The 76-year-old would reflect the centre-right preference. He is widely respected but may face opposition from leaders of other parties who have said they will not back a government led by a figure so close to the Berlusconi camp.
  • 15:24
    Berlusconi wins crucial vote in the Italian parliament but loses majority. Some 321 opposition deputies abstained from the vote plus one other government deputy, leaving the embattled PM with just 308 votes. There have already been calls for him to go. The loss of his majority may now trigger a confidence vote.
  • 15:39
    Berlusconi is said to be meeting his close ally, Northern League leader Umberto Bossi, who earlier called on him to resign. The politcal situation in Italy is unclear but the Italian PM appears to be in deep trouble after losing his parliamentary majority. All eyes are now on the markets amid conflicting reports that the ECB is buying up Italian bonds. 
  • 15:43
    Berlusconi has just popped into a car outside the Italian parliament amid reports that he may be intending to go to the president. Is he intending to resign? Italian defence minister insists all options remain open. Italian 10-year bond yields are on the march again. Having eased 6.59% just ahead of today's vote, they've since jumped back up to 6.7%.
  • 15:44
    Last moments as leader?
    Last moments as leader?
  • 15:57
    After the vote, opposition leader Pier Luigi Bersani immediately called on Berlusconi to resign, saying Italy ran a real risk of losing access to financial markets as yields on government bonds  approached the red line of 7%. "I ask you, Mr prime minister, with all my strength, to finally take account of the situation ... and resign," Bersani said. Separately, we're hearing the Greek cabinet has resigned en masse to make way for a new unity government.
  • 16:08
    Trader reaction to the vote: Marc Chandler, global head of currency strategy at Brown Brothers Harriman, says: "Basically this is the worst possible combination of events - he wins the vote but doesn't get the majority". "This is euro negative because it increases near-term uncertainty ... it keeps uncertainty hanging over the market."
  • 16:11
    Signor Bunga Bunga holds hands with his ally Umberto Bossi during today's crucial vote
    Signor Bunga Bunga holds hands with his ally Umberto Bossi during today's crucial vote
  • 16:25
    EU economics commissioner Olli Rehn says the EU is prepared for every Greek scenario including the country's exit from union. Speaking in Brussels this afternoon, he said he expects new rules on economic governance to be implemented by mid-December.
  • 16:38
    Olli Rehn has also said the European Commission inspectors charged with making sure Italy carries out planned budget cuts and economic reforms will begin work in Rome tomorrow.  The economic situation in Italy is "very worrying," said Rehn.
  • 16:42
    Yields on Italian 10-year government bonds have hit another record high this evening as political uncertainty in Italy reigns after today's crucial vote. Berlusconi won the vote on the country's 2010 public accounts but lost his parliamentary majority along the way, leaving him wounded but still clinging to power, a situation which the markets feared most. Having eased to 6.59% just ahead of today's vote, 10-year bond yields have since jumped back up to 6.76%. Berlusconi has still given no indication what course of action he intends to take.
  • 16:59
    Berlusconi's notes from parliament
    Berlusconi's notes from parliament
  • 17:04
    This picture is doing the roads of Berlusconi's notes during the budget vote in parliament. Our Rome Correspondent Paddy Agnew confirms that one of the phrases he noted down was "I understand, I resign"
  • 17:12
    Silvio Berlusconi will consult tonight with President Giorgio Napolitano but won't resign, Ansa the Italian newswire is reporting, citing officials close to the premier.   The meeting will take place around 6.30 pm in Rome
  • 17:14
    Market close update: Europe's equity markets seem to have taken comfort from Italy's passing of the budget vote even if Berlusconi lost his majority. France's CAC 40 Index advanced 1.5 per cent, Germany's DAX Index rose 0.7 per cent and in London the FTSE 100 Index added 1.2 per cent.
  • 17:36
    Are investors fleeing to safety? Gold has hit $1,800 an ounce in London
  • 18:05
    Minister for Finance Michael Noonan argued in favour of a financial transaction tax at today's Ecofin meeting and dismissed a compromise proposal that it should only be levied in the eurozone, our European Correspondent Arthur Beesley reports.

     “We think there should be a tax on the financial sector, after all countries all over Europe including Ireland have paid a lot of taxpayers’ money to support the banking system. There must be a day when it’s payback time for the taxpayer,” Mr Noonan told reporters after the meeting.
  • 18:28
    Berlusconi's own party seem to be turning on him: MP Luigi Vitali has urged the Italian prime minister to resign. Berlusconi mustn't "try to stay on at any cost" because "the numbers are what they are" in parliament, he said in an interview with Ansa
  • 18:55
    Silvio Berlusconi to resign after new austerity measures are passed according to Bloomberg and Reuters reports
  • 19:00
    It is Italian President Giorgio Napolitano who has said Berlusconi will resign after next week's votes on the austerity plan. US markets have gone up on the news. The Standard and Poor's  500 Index has climbed 0.6 percent to 1,268.7.
  • 19:07
    Euro up against dollar, German bund futures fall, oil rebounds to near a 3 month high and US Treasuries have fallen back - all on news of Berlusconi's planned resignation.
  • 19:09
    No change in Mr Berlusconi's Facebook status however
  • 19:29
    It's never simple with Berlusconi - Ansa is reporting him saying the
    only option to resolve the political crisis is to hold early elections.
  • 19:39
    Meanwhile in Greece state-run NET TV and To Vima newspaper are reporting that former ECB official Lucas Papademos will accept the role of prime minister to lead an interim government of national unity
  • 20:09
    That's it for today on the live blog. Any further updates will be posted as stories on