Spain's debt costs hit the danger level
Moody puts Spain's credit rating to Baa3, one level above junk
In spite of last weekend's euro zone agreement to lend Spain up to $125
billion to recapitalize the nation's sputtering banks, borrowing costs
hit a whopping seven percent in Spain for first time ever, putting the
nation at risk for seeking a bailout. In the meantime, German Chancellor
Angela Merkel has withstood pressure for Germany -- Europe's most
powerful economy, to underwrite debt or guarantee bank deposits in the
euro zone as Spain's soaring borrowing costs raised new alarm.
German Chancellor Angela Merkel says such ideas are 'counterproductive' and would violate the German constitution. She instead called for gradual steps towards the 'Herculean task' of building a European political union.
Merkel says such ideas are "counterproductive" and would violate the German constitution. She instead called for gradual steps towards the "Herculean task" of building a European political union.
"It is our task today to make up for what was not done (when the euro was created in 1999) and to end the vicious circle of ever new debt, of not sticking to the rules," Merkel said.
"Germany is putting this strength and this power to use for the wellbeing of people, not just in Germany but also to help European unity and the global economy. But we also know Germany's strength is not infinite," Merkel said about overstating the resources of Europe's biggest economy.
Spain's 10-year bond yield hit a euro lifetime high above 7 percent - a level above which Ireland, Greece and Portugal were driven to seek international rescues. Adding to the economic tailspin was when Moody's Investor Service slashed Spain's sovereign credit rating by three notches to Baa3, just one level above junk.
Beleaguered Italy, next in line for a financial crisis, saw its three-year borrowing costs shoot up to 5.3 percent at auction this week. The rates were Italy's highest since December, in spite of Germany's strong expression of support for Monti's reforms when he visited Berlin on Wednesday.
Recently elected French President Francois Hollande said in an interview with Greek television that he wanted Athens to stay in the single currency, and that it was up to Greek voters to render a decision.
"But I have to warn them, because I am a friend of Greece, which if the impression is given that Greece wants to distance itself from its commitments and abandon all prospect of recovery, there will be countries in the euro zone which will prefer to finish with the presence of Greece in the euro zone."
He did not name the countries but German, Dutch and Austrian officials have spoken openly of a possible Greek exit.
© 2012, Catholic Online. Distributed by NEWS CONSORTIUM.
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Pope Benedict XVI's Prayer Intentions for January 2013
General Intention: The Faith of Christians. That in this Year of Faith Christians may deepen their knowledge of the mystery of Christ and witness joyfully to the gift of faith in him.
Missionary Intention: Middle Eastern Christians. That the Christian communities of the Middle East, often discriminated against, may receive from the Holy Spirit the strength of fidelity and perseverance.
Keywords: Spain economy, Angela Merkel, Francois Hollande, Moody's
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