Today's Coming Crisis Movie

Thursday, November 17, 2011

French and Germans clash over European Central Bank intervention as borrowing costs threaten triple-A rated economies - 17th Nov 2011

France and Germany, Europe's two central powers, clashed today over whether the European Central Bank should intervene to halt the eurozone's accelerating debt crisis - as modest bond purchases failed to stop the rout.

Facing rising borrowing costs as its AAA credit rating comes under threat, France appeared to plead for stronger ECB action, adding to mounting global pressure spelled out by U.S. President Barack Obama.

Bond market contagion is spreading across Europe. Italian 10-year bond yields have risen above 7 per cent, unaffordable in the long term.

Yields on bonds issued by France, the Netherlands and Austria - which along with Germany form the core of the euro zone - have also climbed.

'The ECB's role is to ensure the stability of the euro, but also the financial stability of Europe. We trust that the ECB will take the necessary measures to ensure financial stability in Europe,' government spokeswoman Valerie Pecresse said after a cabinet meeting in Paris.

Pecresse said Paris believed the risk premium investors charge to hold French debt rather than safe haven 10-year German Bunds 'is not justified'. Read More