As Germany and France, the two dominating carmakers in Europe, are rest assured to make the best possible efforts in bringing about changes to the European Union governing treaties, Chancellor Angela Merkel too sticks to her point. Angela has been against any sort of expansion of European Central Bank’s role.
France has put considerable pressure on Berlin to position the ECB at the bottom of the potential options list when it comes to lending. Furthermore, it expressed concerns over shielding the debt-ridden euro zone members from a possible entrapment of bond markets. However, the German Chancellor maintained her stand and put much emphasis on the crisis talks.
French President Nicolas Sarkozy and Italian Prime Minister Mario Monti threw their weight behind Angela at a press conference in Strasbourg as she reiterated her point, which observers and traders see as jeopardy to the euro zone.
“The French President has just underlined that the European Central Bank is independent. So the eventual modifications to the treaties will not concern the duties of the ECB, which concern monetary policy and monetary stability,” Merkel told reporters in the eastern French city.
Sarkozy echoed the German Chancellor saying, “All three of us said that with respect for the independence of this institution, one should refrain from positive or negative demands of the ECB.”
Earlier, Sarkozy’s senior ministers had cleared the air stating that Paris was taking an active part in inducing a change in the ECB’s role. Reacting on the statements of the ministers, Berlin urged that the efforts must confine themselves to control inflation and not try to spoon-feed the insolvent states.
France’s minister for European affairs, Jean Leonetti, in a bid to bring further clarity explained, “France eventually wants the European Central Bank to have the same role as the Federal Reserve in the United States. What’s going on is very abnormal.” “Why is the euro under attack? It is simple. In the United States there is a Federal Reserve. Europe has the European Central Bank, but the European Central Bank does not buy up sovereign debt if needed,” he argued.
Per contra, Germany mulls upon modifying the European treaties in order to impose a greater budget discipline on its critically burdened partners.
International rating agency Fitch has compressed the living standards of people in Portugal, as the nation's credit rating was reduced to junk status owing to its humongous debts and weak economic prospects. Fitch said on 24th November that it is downgrading Portugal one notch, to BB+ from BBB-.
The agency supported its move by saying that Portugal’s “large fiscal imbalances, high indebtedness across all sectors, and adverse macroeconomic outlook,” were the primary culprits.
The latest happening proves to be a double whammy for Portugal amidst its struggle to resurrect the fiscal health after taking a €78 billion or $104 billion bailout earlier this year to keep bankruptcy at bay.
Thus, Europe's present condition seems to be quite critical and moreover, with the absence of any effective measure being incorporated, the citizens find themselves sandwiched between the yes' and the no’s.
