Euro in `Exceptionally Serious' Situation Amid Irish Bailout, Merkel Says
Germany's Chancellor Angela Merkel
Michele Tantussi/Bloomberg
Angela Merkel, Germany's chancellor, gestures during the joint press conference at the Federal Chancellory in Berlin.
Angela Merkel, Germany's chancellor, gestures during the joint press conference at the Federal Chancellory in Berlin. Photographer: Michele Tantussi/Bloomberg
Nov. 23 (Bloomberg) -- Billionaire investor Wilbur Ross, chairman and chief executive officer of WL Ross & Co., discusses Ireland's financial crisis and his bid for EBS Building Society. Ross, speaking from Palm Beach, Florida, with Betty Liu on Bloomberg Television's "In the Loop," also talks about the euro and the Federal Bureau of Investigation's raid of hedge funds as part of an insider trading probe. (Source: Bloomberg)
German Chancellor Angela Merkel said the euro is in an “exceptionally serious” situation after Ireland became the second European country to need a rescue after Greece.
“I don’t want to paint a dramatic picture, but I just want to say that a year ago we couldn’t imagine the debate we had in the spring and the measures we had to take” over Greece, Merkel said in a speech to Germany’s BDA employers’ group in Berlin today. “We are facing an exceptionally serious situation as far as the euro’s situation is concerned.”
While Ireland gives “cause for great concern,” the problem is different from Greece because Irish banks are the main issue, Merkel said. “But it’s also right and good” that the European Union set up the 750 billion-euro ($1 trillion) rescue package with the International Monetary Fund that Ireland is now preparing to tap.
Merkel is stressing the threat to the euro posed by indebted member countries as she pushes German plans to make investors help pay for any future crisis in the currency area. European Central Bank President Jean-Claude Trichet and leaders in Spain and Greece have clashed with Merkel, saying her stance risks derailing euro-area nations’ deficit-cutting efforts.
The euro extended declines after Merkel’s comments, dropping 1.6 percent to $1.3404 at 4:30 p.m. in Berlin.
Bonds issued by the euro area’s high-deficit nations slumped amid speculation that a rescue for Ireland won’t damp the debt crisis. Spanish 10-year bonds dropped a sixth day, with the yield 12 basis points higher at 4.87 percent. Portugal’s 10- year yield rose seven basis points to 6.88 percent.
Merkel said that she will keep pushing for a permanent rescue system that forces bondholders to accept losses on sovereign defaults from 2013. At the same time, “tough conditions” will be imposed on any nation that seeks a bailout.
“I won’t let up on this because otherwise that primacy of politics over finance can’t be enforced,” Merkel said. “It remains our task to keep calling for tough measures and tough conditions, but also to express clear support for the euro.”
To contact the reporter on this story: Tony Czuczka in Berlin at aczuczka@bloomberg.net
To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net
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