Trading in Europe on Tuesday showed that the presence of Prime Minister-designate Mario Monti in Italy, and new leader Lucas Papademos in Greece, has failed to reassure investors; stocks and the euro were both down as Monti worked to put together a new government that would support austerity measures mandated by the European Union.
Other bad news included the opinion of a think tank that France’s financial situation should be setting off “alarm bells.”
Reuters reported that markets are concerned that neither Monti nor Papademos has the political or popular clout to push through measures considered essential by the EU to stem contagion.
In Europe, markets were down Tuesday: The DAX dropped 51 points to 5,933 and the CAC was down 59 points to 3,049.
A think tank report by Brussels-based Lisbon Council underscored the troubled atmosphere, calling attention to France’s inability to make quick economic moves in response to the debt crisis.
The 75-page Euro Plus Monitor report said in part, “Among the six euro zone countries with a AAA rating, France achieves by far the lowest ranking in the study’s fundamental health check. The results are too mediocre for a country that wants to safeguard its place in the top league … Alarm bells should be ringing for France.”
While both France and Germany booked economic growth in Q3, economists and analysts were not reassured. France reported stronger-than-expected growth of 0.4% after a Q2 contraction, thanks to stronger household consumption, but that did little to lift spirits.
Marc Touati of Assya Compagnie Financiére was quoted saying, “You could call this the lull in the storm. What’s worrying is that industrial investment has started going down, which proves that the virtuous circle of investment, growth and job creation is not working.”
Even Germany’s dependability is now in doubt. Carsten Brzeski of Dutch bank ING was quoted saying, “The German economy has lost its immunity. With the latest stage of the sovereign debt crisis, today’s numbers are as good as it gets for the German economy.”