Merkel Advisor Feld: "Euro Crisis Will Return Shortly And With A Vengeance"

Tyler Durden's picture

For all the groundless, starry-eyed optimism permeating Europe's bureaucratic corridors of the fading oligarchy these days (because this time is not like every other time that, too, was different), there has always existed one sure, never-fail antidote: Germany, which without fail has managed to ground Europe any time its delusion of grandure hit escape velocity. Sure enough, while all the statist soothsayers who threatened with armageddon if the outcome of the Italian elections happened to be precisely the one that transpired, were stuck in backpedal mode, and scrambling to calm nerves that all shall be well after all, one person who refuses to play by the script is Lars Feld, member of panel of economic advisers to German Chancellor Angela Merkel, who in an interview with the Frankfurter Allgemeine Zeitung tomorrow says the euro crisis is to return shortly and "with a vengeance" as capital loss will lead to higher risk premiums for Italy’s interest rates.

From Handelsblatt, previewing the FAZ Wednesday edition:

The Italian economy would not find their way out of the recession, according to the pessimistic assessment by Lars Feld: "The sustainability of Italian public finances is in jeopardy. The euro crisis will therefore return shortly with a vengeance."


Apparently, the Italians were not ready to move on the path of reform that has been taken by Mr. Mario Monti, Field said.


"You can not expect that Italy's European partners or the ECB will stabilize the Italian economy, when its people are not ready for reform."

And making sure Feld is not alone, he was joined by Anton Boerner, head of Germany’s BGA exporters’ association, who in turn said Italy must reform tax, labor, judicial system or risk "irreparable damage" of euro. Finally, Boerner says if Italy not willing to reform, "we have to think about how to deal with a modified eurozone."

What exactly a "modified" eurozone means we don't know. We will, however, surely find out soon enough.

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Ban KKiller's picture

But Italy says THEIR derivatives are REAL assets. GS told them so. 

electricgorilla's picture

Italian financiars should be buying volatility options. They know how to stir the pot. Is the new Pope going to be black?

IMA5U's picture

Zero Hedge readers can only hope The Euro Crisis is back so the world goes to hell and a handbasket


And hopefully Gold rallies

khakuda's picture

A euro debacle would sure do it.

hardcleareye's picture

Seems to me the Euro is suffering from a credibility trap....

In the words of Jess...

"A credibility trap is a condition wherein the financial, political and informational functions of a society have been compromised by corruption and fraud, so that the leadership cannot effectively reform, or even honestly address, the problems of that system without impairing and implicating, at least incidentally, a broad swath of the power structure, including themselves."


magpie's picture

I just loved reading the angry comments in German newspapers who defended the 'alternativlos' solidarity bailout to poor Greece against reactionary racist German populists but now are screaming bloody murder because of the stupid and lazy Ithakers' inability to understand the European project.

OldE_Ant's picture

"we have to think about how to deal with a modified eurozone."

translated. Looks like we'll let Italy fend for itself while we try to prop up what is left.

Big question is who is knee deep in Italian debt that is already on the edge.?

TNTARG's picture

Naaaaaaaaaah! I love the mainstreams titles:

Philipp Missfelder, CDU's foreign policy manager (CDU is Merkel's party): "You italians aren't Greece, you're a G8 member and a key member of the Eurozone. Euro can't afford a greek-like scenario, new elections on a short term... It will be an instability excess". (

Wall Street Journal on line: "Uncertain Election Results Rekindle Euro-Crisis Fears"

The Economist: "Italian politics. A dangerous mess" (loved the caricature)

CNN: "Italy sparks new fears for eurozone"

Frankfurter Allgemeine: "Allarm signals, almost half of italians choosing anti-europe options"

The GUardian: "Deadlock at Rome"

and so on.

Banksters' media spreading fear... Or feeling the people breathing on their neck?

magpie's picture

You aint seen nothing yet...the media will have to defend austerity in Italy while attacking & shifting the blame for the "sequestration" in the USA.

hardcleareye's picture

Oh shit....  this isn't going to be pretty!


Peter K's picture

How's that for a breath of fresh air. Kick the bum's out of the Eurozone.


But seriously, I think the next phase is a referendum on staying in the Euro. Italy has the most of any of the other Euro prisoners to gain by ditching it. And they have a 1 + 5 star coalition that just got 60% of the vote. :)

Toolshed's picture

Interesting. The message I got from this is:

"If you refuse to vote the way we tell you to, we won't let you play with us anymore."

Not refreshing at all in my opinion.

smacker's picture



A major problem in Italy, Spain and even more so in Greece is that the populations of these countries wanted to join -- first the EU, then the Eurozone -- because they saw it as a route to bringing themselves into mainstream Europe and of bringing their utterly corrupt political elites to heel. It hasn't worked. The elites still have their hands in the till and kickbacks are rampant.

Many Greeks are still adamant to remain part of the EZ despite the economic collapse it has brought them but they offer no solution to their nation's debt crises, except to reduce austerity and implicitly borrow more. That won't work either.

Of course, the corrupt political elites of all these countries -- instead of allowing themselves to be brought to heel -- saw an opportunity in joining the EZ to raise their borrowing/spending on vanity projects and generally milk the rich northern members like The Fatherland. The Germans and French (and the EU-cratocracy under Barreloso) only have themselves to blame for this crises.

Unless one or more EZ member nations decide that enough is enough of this nonsense, it could go on for years, occasionally boiling over as we now see because of Italy's election results. But dealing with it requires that someone in each country has the intellect and power to take meaningful decisions to break the insanity. I am doubtful that such people exist.