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Euro zone debt crisis deepens

Euro zone debt crisis deepens
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Trying not to get sucked in the euro zone debt crisis, Italy is moving to rapidly cut its debts.

Economy Minister Giulio Tremonti, widely seen as the guarantor of Italian financial stability says the government’s four-year, 40 billion euro austerity package will be approved by parliament by Friday.

The future head of the European Central Bank, Mario Draghi, warned if that is not done Italy will not be able to afford the higher borrowing costs that would follow.

He told a banking conference: “The uncertainty about the outlook for Italy’s public debt has contributed to the stress on government bonds in the last few days. The measures implemented by the government are an important step forward towards budget recovery.”

Ireland’s government meanwhile is angry the country’s credit rating has been cut to junk level by Moody’s which warned the debt-laden country would likely need a second EU bailout.

Dublin is blaming Europe’s delayed and piecemeal response to the debt crisis for that. Richard Bruton, Irish Minister for Enterprise, Jobs and Innovation, said: “In an uncertain market, rating agencies who take decisions like this, we have to stick to our knitting so to speak, continue to resolve the structure problems in our economy, and that’s how we’ll get back into the borrowing markets.”

And Greece’s troubles continue to get worse. Late on Wednesday Fitch Ratings downgraded the country deeper into junk territory, cutting it to CCC – just one notch above default.

It said that is because of the absence of a new and fully funded financing programme for the country.

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