The European Union began a nine-day battle on Thursday over federal-style changes to save the debt-saddled eurozone, withFrench President Nicolas Sarkozy saying that Europe needs to be “refounded”.
In a landmark address in front of 5,000 supporters, Sarkozy said he would meet his German counterpart Chancellor Angela Merkel on Monday to agree upon and announce a joint plan to take to the EU summit on December 8 and 9.
The French leader warned the developed world was entering a “new economic cycle” dominated by debt reduction, and thus of tough times ahead.
“Europe will have to make crucial choices in the weeks to come,” he warned in the southern port city of Toulon, adding: “Europe is not a choice, it is a necessity, but it needs to be rethought, refounded.”
Merkel is to lay down her vision of how the EU should work, and her conditions, in a speech to the Bundestag lower house of parliament on Friday.
“France is fighting with Germany for a new treaty. More discipline, more solidarity, more responsibility … true economic government,” said Sarkozy, urging members to adopt a “Golden Rule” obliging them to balance their budgets.
The stability of the eurozone economy has been rocked by a sovereign debt crisis spreading from the eurozone’s highly indebted peripheral states like Greece and Ireland towards major economies such as Spain and Italy.
European leaders have struggled to convince markets that they will be able to stave off the risk of a massive default that could bring down banks, cause a global credit crunch and bring down their single currency.
Next week’s Brussels summit is now seen as key to halting the crisis.
The European Central Bank and Bank of England cooled the air after shock action by central banks to shore up the global financial system boosted markets on Wednesday.
The new ECB president Mario Draghi sent a strong message that there is no magic wand, telling the European Parliament that the central bank will not act beyond rules laid down by EU treaties and that its purchasing of devalued government bonds is “temporary and limited”.
The bank “should not be asked to do things that are not within the treaty”, he told the European Parliament. “It would be not legal, but also a mistake because… it would undermine the credibility in the ECB,” he added.
Bank of England governor Mervyn King said that joint central bank action launched on Wednesday was merely “some temporary relief to liquidity problems” and that the underlying causes had to be “tackled directly by the governments involved”.
Britain is not a member of the eurozone, but as a member of the European Union and a financial centre, is highly exposed to the eurozone debt crisis, and King said the BoE had prepared a plan in case the single currency area breaks up.
Germany strongly backs the ECB line, arguing that the first condition of a solution to the debt crisis is cast-iron federal-type corsets controlling national budgets and economic reforms to release growth.
“What we need first and foremost are automatic sanctions when (budget) stability rules are broken,” said German Minister Guido Westerwelle.
France however has pushed for the ECB to act as a lender of a last resort to eurozone governments to ensure that panicky markets do not push states into into insolvency.
Sarkozy said however that while the European Central Bank “is and will remain independent” he believes it will act to counter the threat of the eurozone crisis.
“I’m convinced that faced with the risk of deflation that is threatening Europe the central bank will act,” Sarkozy said, adding that it was up to the ECB to decide when and how to act.
The catastrophic risks that Europe is running were highlighted by the EU’s Economy Commissioner Olli Rehn.
He declared Wednesday that monetary union “will either have to be completed through much deeper integration or we will have to accept a gradual disintegration of over half a century of European integration”.
Market tension remains high, with the euro firming but European stocks slipping on Thursday after a global rally at the central bank action the day before. Wall Street was mixed in afternoon trading.
Italy, at high risk of being the next and by far the biggest eurozone domino to need a bailout, said it is at risk of entering recession.
This warning came as the new Prime Minister Mario Monti is putting together his master plan to reform the budget after consultations with EU officials, for presentation to his cabinet on Monday.
Germany and France have warned that if Italy’s finances become unsustainable the eurozone will break up.
Disney heiress who went undercover to Disneyland ‘livid’ at conditions and pay
Heiress Abigail Disney went to one of her family's resorts to see conditions for workers herself and was disgusted by what she saw.
In comments to Yahoo News podcast "Through Her Eyes," Disney described how she went to Disneyland in California undercover and found that workers at the resort were treated poorly—and underpaid.
"Every single one of these people I talked to were saying, 'I don't know how I can maintain this face of joy and warmth when I have to go home and forage for food in other people's garbage,'" said Disney.
Ex-Peru president wanted for corruption arrested in the US
Former Peruvian president Alejandro Toledo was arrested in the United States Tuesday to face extradition to his home country on corruption charges, authorities in the South American nation said.
The 73-year-old is suspected of involvement in the sprawling Odebrecht scandal in which the construction giant paid hundreds of millions of dollars in bribes throughout the continent to secure huge public works contracts.
The Peruvian attorney general's office announced on Twitter that Toledo "was arrested this morning for extradition, in the United States."
Toledo has been formally charged with receiving a $20 million payment from Odebrecht to grant it the tender to build the Interoceanic Highway that links Peru with Brazil.
Comic-Con mines past for future hits on 50th edition
A smorgasbord of sequels, prequels and reunions from "Terminator" to "Game of Thrones" awaits thousands of misty-eyed comic book geeks and sci-fi nerds descending on San Diego this week for the world's largest celebration of pop culture fandom.
The 50th edition of Comic-Con International will see 135,000 cosplayers, bloggers, movie executives and humble fans pile into a sweaty convention center for glimpses of their heroes, in town to promote the next mega-hit films, TV shows and comic books.
This anniversary edition promises to be more nostalgia-laden than most -- among those expected to appear are Arnold Schwarzenegger and Linda Hamilton, who will soon reunite on screen for the first time since 1991's "Terminator 2" for Paramount's killer cyborg sequel "Dark Fate."