By the end of last week it looked as if a new world-wide financial crisis was being fueled by the Greek debt crisis contagion that had finally spread to Italy. The Italian bonds were trading at their highest level ever in relation to German bunds. By the end of the week, European political leaders were scurrying about trying to fix things.
Berlusconi pledged to balance Italy’s budget earlier by 2013 instead of 2014.. He also introduced a balanced budget amendment for the Italian constitution. He was also going to fix the regulations that prevented much economic activity such a building a house.
Olli Rehn, the European Union economy commissioner said the countries of the Euro Zone needed to pull together fast. Even the ECB announced that they were going to buy bonds from Italy and Spain.
The mandate is there. German taxpayers are going to have to pay more to beef up the bailout fund.