From Mario Monti, Spiegel: I can only welcome the ECB’s statement that the market for sovereign bonds in the euro zone is undergoing a period of "severe malfunctioning." It is also true that some countries face "exceptionally high" costs in financing their debt. That is exactly what I have been saying for some time. It is self-evident that banks are pulling back behind their national borders, making it even more difficult for those countries that are suffering from market mistrust. These problems must be solved quickly so that there can be no further uncertainty regarding the euro zone’s ability to withstand the crisis. . . .
Italy’s current government has ensured a rapid reduction of the budget deficit, has passed structural reforms and has improved growth potential. Despite great sacrifice, Italians have accepted this course. . . .
We have all made mistakes, even with the formation of the euro, even in an early phase when France and Germany in 2002 and 2003 violated the rules imposed by the Stability and Growth Pact and became poor examples for others. We now have to create a more responsible currency union. . . .
I told Chancellor Merkel of increasing resentment here in parliament — against the EU, against the euro, against the Germans and sometimes against the chancellor herself. That, though, is a problem that goes beyond just Germany and Italy. The tensions that have accompanied the euro zone in recent years are showing signs of a psychological dissolution of Europe. We have to work hard to put a stop to it. If we were to compare Europe to a cathedral, then the euro would be its most perfect spire to date. . . .
[T]here is also a front line between North and South, there are mutual prejudices. That is very disquieting and we need to fight it. I am certain that most Germans have instinctive liking for Italy, just as Italians admire Germans for their many qualities. But I also have the impression that the majority of Germans somehow believe that Italy has already received financial aid from Germany or the European Union, which simply is not the case. Not a single euro. . . .
Germany also profits from the fact that sovereign bonds in the Federal Republic of Germany are so cheap and that they can at times even be issued with negative interest rates. It is because of the risk of a euro collapse that the difference between Italy’s interest rates and those of Germany is so great. In this way, the high interest rates that Italy is now having to pay are subsidizing the low ones that Germany pays. Without this risk, Germany would pay somewhat higher rates. In addition, no one can deny that Germany, simply because it is big, so productive and so efficient, is the greatest beneficiary of the common market. . . .
If everything goes according to plan, I will remain in office until April 2013, and I hope that I can rescue Italy from financial ruin by then — and this with moral support from a few European friends, led by Germany. But I will also say very clearly: moral support, not financial. And, finally, I hope that Italy will simply become a little bit more boring to outside observers.
Excerpts from interview of Italian Prime Minister Mario Monti by Fiona Ehlers and Hans Hoyng. (photo: AFP) (via Real Clear World)
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