• Members of the European Parliament’s Economic and Monetary Affairs Committee met yesterday in an extraordinary meeting to discuss the sovereign debt crisis with the President of the ECB, Jean-Claude Trichet and Commissioner for Economic and Monetary Affairs, Olli Rehn, amongst others.
The meeting took place as news emerged that Angela Merkel’s coalition was in crisis as she no longer had enough votes to secure backing to her and Sarkozy’s Eurozone ‘rescue’ plan. Merkel’s Bavarian sister party the CSU have rebutted the Franco-German plans and said that EMU countries in crisis should be allowed to default.
I asked Mr Trichet to face the music and allow default. I told him that markets look to countries in trouble, but they also look to the reaction of the stronger countries in the Eurozone. Take Germany and France: In Germany discontent is spreading.
I rarely find myself in agreement with the German CSU but in a paper released yesterday that is threatening the make up of Merkel’s coalition they want to tear up the Franco-German plan and allow banks that cannot survive to go bankrupt and also allow countries to default. They have finally seen the light!
In France, the parliament there cannot agree on the constitutional zero deficit scheme. How long can the ECB continue to ignore these reactions?
I also asked Mr Trichet to reconsider lowering the ECB refinancing rate by a full percentage point (100 basis points) to try and get our economies moving again.