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Eurozone drama: act fast, speak with one voice, analysts say

14 July 2011, 16:44 CET
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(PARIS) - Pressure is rising on EU and eurozone leaders to speak with one voice, put differences aside and get ahead of the markets in solving the spreading debt crisis.

Here are the views of some leading figures and analysts.

- Italian Economy Minister Giulio Tremonti told parliament before a vote on austerity budget measures: "If we don't have a balanced budget then public debt -- a monster from our past -- would devour our future and the future of our children. The world is watching us.

"There should be no illusions about who will be saved. Like on the Titanic, the first class passengers won't be able to save themselves."

- Italian central bank chief Mario Draghi, a member of the European Central Bank governing council and the future head of the ECB, warned that "solvency of sovereign states is no longer to be taken for granted" and was only "possible with the public accounts in order.

"The credibility credit given by stronger eurozone countries has expired."

- Milan economics professor Guido Tabellini said the rise in Italy's cost of borrowing rates on financial markets spelled real danger. "Another couple of weeks like this and Italy is out of the market."

- Forex.com research director Kathleen Brooks said the sovereign debt crisis was "now spreading its tentacles throughout the western world.

"For too long falsely benign conditions meant that countries in the West could amass huge amounts of debt. But now the market's view has changed." This "will no longer be tolerated."

- German central bank chief Jens Weidmann, also a member of the ECB governing council, said a cacophony of views "has not helped instil confidence in the politicians' ability to resolve their problems" and that "in the current environment, linking new aid to private sector participation (in a rescue package) presents greater risks than chances of seeing every state agree."

- Spanish Prime Minister Jose Luis Rodriguez Zapatero blamed the turmoil dragging in Spain on a German drive to involve private investors in a second Greek bailout.

"I repeat, the debate was not opened properly. I said it at the time. I made my disagreement clear," he said. "The debate was not opened properly and it has not closed."

- Greek Prime Minister George Papandreou: The next few days will be "particularly crucial" for the future of Greece and the eurozone.

- British Prime Minister David Cameron said eurozone countries "have to recognise they have got to do more together faster" and have to "get ahead of the market rather than responding to the next crisis."

- Barclays Capital economist Thorsten Polleit said: "Investors have become increasingly aware that there is no easy and quick way out in economic and political terms."

- Berenberg Bank chief eurozone economist Holger Schmieding warned that "markets are anxiously waiting for policy makers to resolve their differences.

"The dispute between finance ministers and central bankers is dangerous," he stressed.

- Finland Finance Minister Jutta Urpilainen warned there was a "real danger that the crisis will lead to a tidal wave which will spread and we have to do everything in our power to prevent it."

- VTB Capital economist Neil MacKinnon said the result of European bank stress tests due out on Friday, if poor, could threaten "the longer-term viability" of a monetary union caught in "the deadly embrace between under-capitalised banks and over-indebted governments."

- Charles Diebel, head of market strategy at Lloyds Bank Corporate Markets said the eurozone was experiencing an escalation from "a concern over the fiscal outlook in one peripheral country" to contagion and division between politicians, with some "already starting to question the long-term sustainability of the whole (eurozone) project."

- Jean-Dominique Giuliani, head of the Robert Schuman Foundation think tank, said "the spectacle displayed by Europeans in the Greek crisis is disastrous ... Europe is dancing on the edge of the abyss."


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