Debt Crisis Hits Global Markets

Posted November 9th, 2011 at 8:05 pm (UTC-5)
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World financial markets took a dive Wednesday into early Thursday despite Italy's and Greece's attempts to contain fears fueled by their continued political crises.

Stocks were sharply lower in Asian markets Thursday, after a down day in Europe and United States on Wednesday.

Italian President Giorgio Napolitano named former European Commissioner Mario Monti a senator for life in a move widely seen as an attempt to reassure financial markets following Prime Minister Silvio Berlusconi's announcement that he would step down. Monti is seen as the Italian president's only choice to succeed Mr. Berlusconi as prime minister.

Italy's borrowing costs topped the 7 percent threshold Wednesday, which was the borrowing rate that forced Greece, Ireland and Portugal to ask for bailout loans. Italy is eurozone's third largest economy and its bailout would be too expensive for the 17-nation common currency bloc to bear.

Greek Prime Minister gave an impassioned farewell in parliament Wednesday, but Greek leaders failed to announce who would lead the interim power-sharing government.

Eurozone leaders have urged both countries to hasten with unpopular economic reforms aimed at saving them from bankruptcy, which would further destabilize the common currency used by 17 nations and fuel turmoil in the already unstable global financial markets.

The Italian prime minister pledged to step down after lawmakers pass the tough austerity measures, which could happend by the end of the month.

The outgoing Greek leader pledged that his country would do “whatever is required to remain” in the eurozone, and said that the coalition government signals a new future Greece.

Greek news accounts said that 60-year-old Parliament chief Filippos Petsalnikos has been tapped as the interim prime minister after early speculation had centered on Lucas Papademos, an economist and former vice president of the European Central Bank. But no selection was announced and Greek leaders said they would meet again Thursday to try to make a choice.

Mr. Papandreou and opposition leader Antonis Samaras had been locked in talks since Monday on who will lead a power-sharing government until early elections, tentatively scheduled for February 19, are held.

European finance ministers are waiting for the formation of a new government in Greece before deciding whether to grant the country another $11 billion loan installment. Without it the country's finances are expected to collapse within another week or so.