Berlusconi Says Italy Is ‘Up to the Task’ on Debt Crisis as Economy Solid
Italy's Prime Minister Silvio Berlusconi
Jock Fistick/Bloomberg
Prime Minister Silvio Berlusconi, facing record bond yields and calls for his resignation, will seek to reassure the nation as Italy and Spain struggle to avoid becoming the next victims of Europe’s debt crisis.
Prime Minister Silvio Berlusconi, facing record bond yields and calls for his resignation, will seek to reassure the nation as Italy and Spain struggle to avoid becoming the next victims of Europe’s debt crisis. Photographer: Jock Fistick/Bloomberg
Aug. 2 (Bloomberg) -- Michael Spence, a Nobel Prize-winning economist, talks about the outlook for a political resolution to Italy's debt woes. Spence, speaking from Milan, also discusses the U.S. debt-ceiling debate and the country's credit rating with Maryam Nemazee on Bloomberg Television's "The Pulse." (Source: Bloomberg)
Aug. 3 (Bloomberg) -- Bret Barker, a portfolio manager at Los Angeles-based TCW Group Inc., talks about the implications of raising the U.S. debt limit for the country's credit rating and Treasuries. Moody’s Investors Service and Fitch Ratings affirmed their AAA credit ratings for the U.S. while warning that the ratings could be downgraded if lawmakers fail to enact debt reduction measures and the economy weakens. Barker also discusses Europe's debt crisis. He speaks with Susan Li on Bloomberg Television's "First Up." (Source: Bloomberg)
Prime Minister Silvio Berlusconi, facing record bond yields and calls for his resignation, said Italy is “up to the task” of tackling the debt crisis as its economic fundamentals are solid.
“Our banks are liquid, they passed the stress tests, and Italian families are less indebted than others among the major economies,” Berlusconi said today in a speech to the Chamber of Deputies, the lower house of Parliament. “If to our deficit we add the savings of our families, we’d be second in the European Union in terms of solidity.”
Pier Luigi Bersani, leader of the main opposition Democratic Party, repeated a call for the premier to resign. Berlusconi, who reiterated that his government will see out the end of its term in 2013, is due to address the Senate at 7:30 p.m. in another speech on the state of Italy’s economy.
Spanish and Italian bonds rose for the first time in six days today and yields eased from euro-era highs as European policy makers stepped up talks on how to prevent the debt crisis from spiralling out of control. Confidence in Italy has been further shaken by political turmoil, with Berlusconi’s grip on power weakened by corruption allegations against him and some of his main allies.
“Markets are going to remain volatile,” Fabio Fois, an economist at Barclays Capital in London, said by phone after the speech. “It’s good that Berlusconi talked about focusing on growth, on industrial relations and liberalizing the economy as those are things the market can understand, but they are going to have to deliver.”
Aid Plan
Berlusconi has barely spoken publicly since the selloff of Italy accelerated last month in the run-up to an EU summit on July 21. That meeting adopted the new aid plan for Greece and established a mechanism to aid countries facing surging borrowing costs such as Italy and Spain before they require bailouts. Opposition parties had publicly called on Berlusconi to address the nation.
The extra yield premium investors demand to hold Italy’s 10-year bond instead of German bunds narrowed after Berlusconi’s speech to 368 basis points, after earlier reaching 391, a euro- era record.
European Commission President Jose Barroso today urged governments to quickly approve a planned upgrade of the euro- area rescue fund, saying the perception that leaders haven’t found a “systemic” answer to the crisis is hurting investor sentiment. Berlusconi said investors still “haven’t recognized the power” of the changes to the 440 billion-euro ($630 billion) fund announced by European leaders at a July 21 summit.
Bailout Vote
Italy’s Parliament will vote to approve a new package of financial support for Greece and other indebted European countries around mid-September, a person with knowledge of the decision said today.
The vote will cover all changes approved at the European level to the European Financial Stability Facility, including an agreement on July 21 to allow the fund to buy bonds on the secondary market and to help recapitalize banks, said the person, who declined to be identified, citing policy.
Finance Minister Giulio Tremonti met in Luxembourg earlier today with Prime Minister Jean-Claude Juncker, who heads the group of euro-area finance ministers. “We had a long discussion visiting all the problems the euro area is facing and we’ll continue our meditation in common,” Juncker told reporters after the talks, which Tremonti called “long and fruitful.”
Bersani said after Berlusconi’s speech that Italy “is in big trouble” and needs a change of leadership to restore credibility to its politics and regain investor faith.
The government opposes any move to bring it down and install a temporary “technocratic” cabinet to oversee structural reforms, Angelino Alfano, head of Berlusconi’s People of Liberty party, told the Chamber.
“When Italians hear that term, they smell taxes,” said Alfano, the former justice minister.
To contact the reporters on this story: Jeffrey Donovan at jdonovan26@bloomberg.net; Chiara Vasarri in Milan at cvasarri@bloomberg.net
To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net.
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