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Monti pledges to act 'with a sense of urgency'
By Catholic Online (NEWS CONSORTIUM)
November 14th, 2011
Catholic Online (www.catholic.org)
November 14th, 2011
Catholic Online (www.catholic.org)
Mario Monti, Italy's premier-designate has begun work on a new government, with non-political experts tasked with overhauling a sputtering economy, keeping market fears over the country from threatening the existence of the euro. Improving market confidence in Italy is absolutely essential to the future of the eurozone as Italy would be far too expensive to rescue. A default on its $2.6 trillion debt would cause massive chaos in financial markets and shake the global economy.
President Giorgio Napolitano requested that Monti create a government capable of implementing economic reforms aimed at reviving stagnant growth to bring down public debt, stuck near 120 percent of GDP.
Monti says that he will act "with a sense of urgency" to identify ministers in the new government. He also said he would also take the time necessary to secure a strong team. Monti met with various political parties throughout the day ahead of a confidence vote in Parliament later this week.
Some parties were looking to extract concessions in exchange for support to Monti's government.
In the formation of a new government, Italy's political machinery moved with rare efficiency. Both houses passed new austerity and reform measures within two days, paving the way for Berlusconi's resignation.
Napolitano has encouraged all sides of the political spectrum to join forces to rescue Italy from its financial woes, saying it is time to "unleash a collective effort which, unfortunately, has been lacking lately." He also appealed for "maximum cohesion" so the country can rebound.
The pressure for Italy to reform its economy is substantial as it is apparent that the European Central Bank is not shielding it from the bond market turmoil.
The central bank almost halved its purchases of government bonds last week to $6.2 billion, effectively allowing investors to run Italy's bond yields higher. The purchases are aimed at keeping a lid on borrowing rates for Italy and other eurozone countries so they won't get frozen out of financial markets, as has happened to Greece.
International pressure helped accelerate the power shift in Rome, as it did in Greece, where a new government of technocrats also took over last week. It is hoped that administrations of experts not affiliated to parties will be more willing to make the tough, but necessary decisions that politicians have so far balked at.
The battered economies of Italy and Greece kept investors on edge. The yield on Italy's benchmark 10-year bonds fell as low as 6.28 percent in early trading but soon rose again to 6.70 percent - still uncomfortably high and not far from the 7 percent threshold that has pushed other eurozone countries to seek bailouts.
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