German FinMin Warns "I Never Said The Euro Crisis Was Over"
Following on the heels of Merkel's adviser Lars Feld's comments, German finance minister Schaeuble has raised concerns over the results of the Italian elections. His comment that,"I never said the euro crisis was over," stands in contrast to the claims of Monti, Draghi, Lagarde, Barroso, and Sarkozy who all have. along with the market's "doubts that a stable government can be formed," raises the risk of turmoil spreading to other euro countries. Schaeuble commented further that, "now it is up to those who were elected in Italy on Sunday to form a stable government. The faster they do this, the quicker the uncertainty will be overcome." The problem, as Reuters reports, appears to be not just Italy's public dissension over Germany's demands for austerity but his French counterpart's comments that "austerity has gone far enough," to which the German rebuked, "France must also do more here, Hollande knows this and so does Pierre Moscovici." Tension is certainly rising in the depression-addled union, even as Draghi explains - it's all ok, he promises.
- Barroso (The Guardian): "we can say that the existential threat against the euro has essentially been overcome"
- Monti (Bloomberg): "the euro area crisis is almost over"
- Draghi (BBC): "the worst is over, the situation is stabilizing"
- Lagarde (Voice of Russia): "eurozone crisis largely over"
- Sarkozy (China News): "I think we came out of the financial crisis"
German Finance Minister Wolfgang Schaeuble said on Wednesday that Italy's inconclusive weekend election had raised the risk of market turmoil spreading to other euro countries and urged Italian politicians to form a stable government quickly.
"The election result in Italy has sparked doubts in the market that a stable government can be formed. When such doubts arise there is a danger of contagion. We saw this last year when elections in Greece led to political uncertainty. Other countries are then infected," Schaeuble said.
"Now it is up to those who were elected in Italy on Sunday to form a stable government. The faster they do this, the quicker the uncertainty will be overcome," Schaeuble added.
"And by the way, I never said the euro crisis was over. I only said that we have made significant progress. We need to continue on this path, but we will have setbacks."
Schaeuble, 70, has played an important role in shaping Germany's response to the crisis, pushing the idea that southern euro states must consolidate their budgets and reduce debt in order to win back market confidence.
Speaking to Reuters on Tuesday, Schaeuble's French counterpart Pierre Moscovici said the Italian vote, which delivered strong scores for former premier Silvio Berlusconi and upstart comic-turned-politician Beppe Grillo, showed austerity had gone far enough.
"France must also do more here," Schaeuble said. "(French President Francois) Hollande knows this and so does Pierre Moscovici."
"We had a weak fourth quarter last year, but all signs are now pointing to a broad-based recovery in Germany," Schaeuble said.
"We will need to cultivate this, not only the politicians but also those negotiating wages," he added, saying that a narrowing of labor cost differentials between Germany and southern euro countries would bring stability to the single currency bloc.