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Italy at breaking point, Merkel calls for new Europe | Reuters

(Reuters) - Italian borrowing costs reached breaking point Wednesday after Prime Minister Silvio Berlusconi's insistence on elections instead of an interim government opened the way to prolonged instability and delays to long-promised economic reforms.

In a dramatic escalation of the euro zone debt crisis, Italian 10-year bond yields shot above the 7 percent level that is widely deemed unsustainable, reflecting an evaporation of investor confidence and prompting German Chancellor Angela Merkel to issue a call to arms.

Merkel said Europe's plight was now so "unpleasant" that deep structural reforms were needed quickly, warning the rest of the world would not wait. "That will mean more Europe, not less Europe," she told a conference in Berlin.

She called for changes in EU treaties after French President Nicolas Sarkozy advocated a two-speed Europe in which euro zone countries accelerate and deepen integration while an expanding group outside the currency bloc stayed more loosely connected -- a signal that some members may have to quit the euro if the entire structure is not to crumble.

"It is time for a breakthrough to a new Europe," Merkel said. "A community that says, regardless of what happens in the rest of the world, that it can never again change its ground rules, that community simply can't survive."

by afew (afew(a in a circle)eurotrib_dot_com) on Wed Nov 9th, 2011 at 03:30:29 PM EST
afew:
"A community that says, regardless of what happens in the rest of the world, that it can never again change its ground rules, that community simply can't survive."

Does. Not. Parse.

she doesn't have the political power to overcome the BB, does she?

if those ground rules are hard money hawkshit, she can make nice noises, but that's pretty much it, right?

if we can change them, and use the ECB's magic keystrokes to deliver a nice new dose of morphine to the pained patient, then we can go back to BAU, yeah?

Fail.  so basically she's saying that we have to over-ride german bankster paranoia to create a new yurp wide finance entity. we all know that, but why would she say it? is there a shred of sincerity there, or is it just blather?

last Q...is there any long term downside for german banks to crash the euro? iow, is it possible they have bet on it failing, like GS did against the sub-prime loans?

"I would rather have questions that can't be answered than answers that can't be questioned." - Richard Feynman

by melo (melometa4(at)gmail.com) on Thu Nov 10th, 2011 at 05:28:40 AM EST
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