Herman Van Rompuy, the President of the European Council, is meeting with the top financial officials of the euro zone to discuss Italy. Anxiety is mounting. Italy has the largest national debt as a percentage of GDP in the euro zone, after Greece. It ranks 8 in the world at 119%. To compare, Britain ranks 22 with 76.5%.
The interest hikes of the ECB do not help the indebted nations of the south, although they are needed to curb inflation in the more prosperous north. This underscores, once again, the need for a central financial ministry for the euro zone. It is just impossible to operate a currency in the way the euro is currently managed. It is a futile road to excess sovereign debt, followed by default, recently re-named restructuring. Eventually the money lost in bail outs to the south, which these countries can never repay, will accumulate to financially cripple the north at some future point.
This is a graphic case of not being able to have the cherry without the cake. Euro zone countries will have to get real and accept that you cannot have monetary union without political union. Maybe President Van Rompuy and his officials will touch on this in their talks. Meanwhile the outlook for Italy is uncertain.