Euro response wrong, Germans told
Ireland, Britain and France unite to criticise Berlin's approach
Published 17/11/2011 | 05:00
GERMANY came under attack from Ireland, Britain and France yesterday as each country criticised Berlin's handling of the financial crisis that has engulfed the continent, threatens to tear apart the euro and plunge the continent into a deep depression.
Stock markets see-sawed as the Bank of England warned that Europe's problems could damage the global economy, but later rallied as a senior official in the US Federal Reserve said the crisis may warrant coordinated action by the US central bank and the European Central Bank.
There was evidence of frayed nerves everywhere as even cautious analysts warned that a financial disaster was possible within days.
"Time is running out fast," said Citigroup chief economist Willem Buiter. "I think we have maybe a few months -- it could be weeks, it could be days -- before there is a material risk of a fundamentally unnecessary default by a country like Spain or Italy."
European Commission President Jose Manuel Barroso told the European Parliament meanwhile that the eurozone faced a systemic crisis and fragmenting the European Union was no solution.
France and Germany, Europe's two central powers, clashed over whether the European Central Bank should intervene more forcefully to halt the crisis after modest bond purchases failed to stop the rout.
As the French 'AAA' credit rating came under sustained threat, France pleaded for stronger ECB action.
The French government's views were expressed even more forcibly by Taoiseach Enda Kenny who used his first official visit to Berlin to criticise his host's opposition to extending the ECB's powers to play a bigger role in resolving the debt crisis.
German Chancellor Angela Merkel swiftly rejected the proposals which have been already slapped down countless times by Germany.
"The way we see the treaties, the ECB doesn't have the possibility of solving these problems," she said after talks with Mr Kenny.
The only way to recover markets' confidence was to implement agreed economic reforms and build a closer European political union by changing the EU treaty, Merkel added.
That would almost certainly mean a referendum here.
The ECB did buy Spanish and Italian bonds yesterday but there was no sign of a change in its policy.
In London, Business Secretary Vince Cable slammed Germany's position on an EU financial transactions tax as "completely unjustified", raising tension between Britain and Germany days before their leaders are due to meet to discuss the euro zone debt crisis.
Mr Cable was responding to Merkel ally who accused Britain of selfishness over its rejection of a European Union-wide financial transactions tax, which Germany backs. Ireland is also opposed to the tax.
President Obama said that whilst there had been progress in putting together unity governments in Italy and Greece, Europe still faced a problem of political will.
"I'm deeply concerned, have been deeply concerned. I suspect will be deeply concerned tomorrow and next week and the week after that," Obama said during a visit to Australia yesterday.
There was some good news. Italy agreed a new cabinet although no member is a politician. Greek Prime Minister Lucas Papademos meanwhile won a confidence vote in parliament, receiving a mandate to push through budget measures necessary to secure financing designed to avert a collapse of the economy and keep Greece in the euro.