Bloomberg
July 20, 2011
Greek Prime Minister George Papandreou says Europe’s leaders need to show tomorrow that they can resolve the European Union debt crisis to avoid a contagion enveloping Italy and Spain.
“It could be a make-or-break moment for where Europe is going,” Papandreou said during an interview in his Athens office at Parliament yesterday. “Markets are saying pretty much what I’m saying too: that Greece is doing what it can, but that Greece is not going to be able to carry the weight of all of Europe and the other problems that Europe has.”
Papandreou travels to Brussels tomorrow to meet with EU leaders as officials struggle to agree on measures to restore confidence in the euro region’s creditworthiness after the last year’s financial rescue of Greece. Policy makers are divided on how to prod investors into financing a new bailout package and whether the 17-nation euro area should issue eurobonds to help debt-laden nations across the bloc tap markets.
German Chancellor Angela Merkel said yesterday Europe’s fiscal crisis can’t be solved in one go, damping expectations that government leaders may resolve the region’s debt woes at the summit. Spanish and Italian 10-year bond yields have risen more than 70 basis points since the start of the month and the Treasury in Madrid said yesterday it sold 3.8 billion euros ($5.4 billion) of 12-month bills at a yield of 3.702 percent, up from 2.695 percent the last time the securities were sold on June 14.
“We have to look at the wider issues,” Papandreou said. “If the spreads in Italy and in Spain go up, these are questions that Greece is not going to solve solving its internal deficiencies, which it’s doing.”
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