As if they don’t have enough to worry about in Europe these days, what with the relief of the Spanish bank bailout fading within hours yesterday and with a Greek election looming this weekend that could lead to a disorderly exit of the nation from the currency union, now there’s apparently a “loose cannon” by the name of Maria Fekter, an Austrian Finance Minister, who seems intent on sowing further confusion about the next potential bailout recipient – Italy.
Ms. Fekter was responsible for these two conflicting headlines that appeared earlier today:
- Austrian Finance Minister Says Italy Unlikely To Need Bailout – WSJ
- Austrian minister says Italy too may need bailout – Reuters
These two reports were released within hours of each other and, the fact is that both are true, though not in the order implied by the links above. First she said that, given Italy’s soaring borrowing rates, they’ll also probably need a bailout and then, no doubt prodded by other EU officials concerned about the impact on financial markets, those comments were walked back, developments that are all detailed in the Reuters report.
Also in the Reuters account we learn that, not long ago, Ms. Fekter said that Greece might be asked to leave the European Union and, when U.S. Treasury Secretary Tim Geithner visited last year, that the fiscal mess in the U.S. is more dire than in Europe.
In all three cases – Italy, Greece, and the U.S. – it seems she was making good sense…
As for Italy, its role in the Spanish bailout was characterized this way by Jeremy Warner in a story at the Telegraph today- This latest euro fix will come apart in less than a month:
Also stressed to virtual breaking point, Italy, becomes liable for some 17.9pc of the cross guarantees, raising the absurd spectacle of Italy borrowing at 5pc to lend to the Spanish banking system at 3pc. European solidarity may be a noble cause, but there must be limits.
This is all getting to be a little bit more ridiculous than its been for the better part of three years now. Perhaps they ought to promote Ms. Fekter into a position of greater power – at least that way, this whole affair would probably be brought to a conclusion – for better or worse – far sooner than it is likely to be with the current cast of characters making all the decisions and issuing all the press releases.