Lunchtime news break: Coalition talks in Greece collapse (will resume tomorrow); Italy sees its borrowing rates soar
Ah, if only we had a third party here that could speak the truth to power! That is what the leader of a small third party has done in Greece.
The leader of the far right party, Popular Orthodox Rally, Giorgos Karazaferis “stormed” out of meetings involving the two major political parties claiming that the two leaders from the major parties were engaging in “tactical games”, the Athens News reported this afternoon.
Because of this all meetings were postponed until tomorrow.
The meetings were supposed to work out the details of a new coalition government, purportedly to be led by the former European Central Bank vice-president Lucas Papademos. But neither the outgoing prime minister George Papandreou, nor the opposition leader Antonis Samaras seem to be able to work out the final details.
Meanwhile the Italian debt crisis is reaching a critical stage. Borrowing costs for Italian debt have broken through the 7 percent level, increasing the costs for the government to pay its debts, and increasing the likelihood that Italy may need its own bailout.
But Italy is Europe’s third largest economy and the thought that it might need a bailout is causing major indigestion among investors and politicians alike (is there a difference?).
Prime Minister Silvio Berlusconi yesterday said he would resign after the passage of certain budget measures, but few think it will be as easy as that to get rid of Italy’s richest man.
This is again leading many commentators to speculate that the Euro is a dead man walking.
But while the financial community wonders about what the world looks like without the Euro, European countries continue to implement austerity measures that are dragging down economic growth.
Why the U.S. media has not been leading the charge for more stimulus is beyond me, because while Italian bond rates have risen, U.S. rates remain at historic lows. The 10-year rate today is still below 2 percent.
What that means is that the cost to borrow is low, meaning that stimulus spending carries lower costs.
So why do I point to the media? Our industry? Because only with stronger consumer growth will advertising grow. By continuing to embrace the austerity mantra the media is cutting its own throats.