- House passes VA reform compromise
- Obama admin to blame for HealthCare.gov woes, $840M cost: GAO
- Al Gore’s climate-changers at EPA hearings foiled by cool temperatures
- Army’s 3-D printed bombs will create ‘a whole new universe’ of deadly capabilities
- Hamas calls on Hezbollah to join in fight against Israel
- Senators to FIFA, others: Don’t reward Putin with the World Cup in 2018
- U.S. condemns Israeli shelling of shelter in Gaza
- Obamacare shoots premiums up by 88 percent in California
- Chicken pox outbreak puts illegal immigrant facility on lockdown
- Obama to Republicans: ‘Stop just hatin’ all the time’
Merkel wants treaty rewrite to fix euro
Question of the Day
BERLIN (AP) — German Chancellor Angela Merkel pushed forward Friday with what markets see as an emerging plan for more effective action to contain the European financial crisis, urging tougher rules against government overspending.
“The German government has made it clear that the European crisis will not be solved in one fell swoop,” Merkel said. “It’s a process, and this process will take years.”
The push by Merkel on debt rules — a day after French President Nicolas Sarkozy made the same case — is being seen as one half of a fresh approach by European leaders to finally get a grip on the crisis more than two years after it started in Greece.
The other half could be more short-term help for other heavily indebted governments from the European Central Bank. Bank President Mario Draghi on Thursday appeared to dangle an offer of new, extraordinary measures if political leaders at the Dec. 9 summit can come together on the kinds of spending rules that Merkel and Sarkozy are advocating.
“Other elements might follow,” Draghi said, fueling speculation that the bank could step up its so-far limited program to buy government bonds issued by struggling countries such as Italy and Spain. That helps keep their borrowing costs down.
Draghi stressed the bond buys “can only be limited.” That has left analysts speculating he might have other forms of support in mind. Those could include extending more unlimited credit to banks having difficulty borrowing because of market fears they may suffer losses on the government bonds they hold.
Together, the different proposals and trade-offs appear to form the next take on Europe’s effort to control the crisis: a statement of intent toward tougher central budget controls, followed by more ECB action and, in coming months, haggling out the details of how much sovereignty states are willing to cede. That in turn could be joined by some form of commonly guaranteed debt issuance — if Germany gets enough of what it wants on strict budget rules to drop its objections.
The prospect of more ECB help has boosted markets, along with coordinated steps Wednesday by central banks to improve shaky commercial banks’ ability to borrow U.S. dollars to fund their operations.
The yield on Italian 10-year bonds fell to 6.48 percent on Friday from over 7 percent the day before, and stocks rose in Asia, Europe and the United States. The Dow industrials were up 0.7 percent at 12,100.86.
Markets have repeatedly risen on anticipation of more aggressive action by governments — only to fall when summits result only in statements of intent or proposals that lack detail.
Analyst at Credit Agricole said markets appear to expect a fiscal pact would be delivered that would allow the ECB to increase its bond purchases.
But they noted that “this is not the first time that great expectations are building ahead of EU summits.”
Italy was readying new action ahead of the summit as well. New Prime Minister Mario Monti has pledged to unveil new austerity measures and structural reforms at a Cabinet meeting on Monday.
Rising borrowing costs fed by fears of default led to Greece, Ireland and Portugal seeking bailout loans from other eurozone governments and the International Monetary Fund. Similar fears are afflicting Italy and Spain, which are too large to bail out. That’s inflaming worries of a globally contagious financial crisis that could push the U.S. and other major economies back into recession.
TWT Video Picks
- Geraldo Rivera: Matt Drudge 'doing his best to stir up a civil war'
- Al Gore's climate-changers at EPA hearings foiled by cool temperatures
- Catholic League slams Obama: 'Do Christian lives mean so little to you?'
- Lois Lerner hated conservatives, new emails show
- HURT: Impeaching Obama is a losing strategy for the GOP
- House unveils bill to speed deportations of illegal immigrant children
- Obama thanks Muslims for 'building the very fabric of our nation'
- CARSON: Rudderless U.S. foreign policy
- Federal judge grants 90-day stay in D.C. gun case
- 'Big Bang' star Mayim Bialik helps send bulletproof vests to IDF
Obama's biggest White House 'fails'
Celebrities turned politicians
Athletes turned actors
20 gadgets that changed the world