The Italian Senate is rushing through austerity measures demanded by the EU to avert a eurozone meltdown, after US President Barack Obama ratcheted up pressure for more dramatic action from the currency bloc.
The Senate approved a new budget law yesterday, clearing the way for approval of the package in the lower house today and the formation of an emergency government to replace that of Italian Prime Minister Silvio Berlusconi.
Obama spoke with German Chancellor Angela Merkel and French President Nicolas Sarkozy late on Thursday and also called Italian President Giorgio Napolitano, who in turn was due to speak to Sarkozy in a round of telephone diplomacy.
A German government official said there had been an “exchange of opinions” between Merkel and Obama, while US Treasury Secretary Timothy Geithner demanded fast action from Europe.
If the votes pass smoothly, Napolitano will accept Berlusconi’s resignation this weekend and ask former European commissioner Mario Monti to form a government.
Berlusconi, who lost his majority in a vote on Tuesday, has promised to resign after the financial stability law is passed by both houses of parliament.
He had insisted on early elections, but then softened his stance. Markets were calmed by the prospect that there would be an interim government, rather than a three-month vacuum before elections are held.
“The most important element to overcome this crisis is a very trusted and able new Italian government that can really fulfill the structural changes that are needed,” European Central Bank (ECB) policymaker Ewald Nowotny said in Beijing.
The euro stabilized, but investors doubted whether it would climb far, given that even a technocrat Italian government might struggle to make progress on long-promised fiscal reforms.
Italian 10-year borrowing costs fell sharply to 6.7 percent, having hit an unsustainable 7.5 percent earlier in the week.
“We can have maybe two or three days of calm — in inverted commas — but nothing has really changed underneath,” one bond trader said.
With European leaders dithering over how to tackle the deepening crisis, pressure has mounted on the ECB to act more forcefully by becoming a full lender of last resort, as the US Federal Reserve and Bank of England are.
Three senior ECB policymakers on Thursday rebuffed arm-twisting from investors and world leaders to intervene massively on bond markets to shield Italy and Spain from financial contagion.
German Minister of Economics and Technology Philipp Roesler yesterday said the ECB did not have “unlimited firepower,” adding that if it opened its floodgates fully, they could never be closed again.
Germany strongly opposes the ECB taking on a broader crisis-fighting role as a threat to the bank’s independence.
Klaus Regling, the head of the 440 billion euro (US$613 billion) European Financial Stability Facility, was reported by the Financial Times as saying the recent market turmoil had made it more difficult to scale it up to 1 trillion euros, as proposed by eurozone leaders who promise a definitive plan by next month.
WASHINGTON’S INCENTIVES: The CHIPS Act set aside US$39 billion in direct grants to persuade the world’s top semiconductor companies to make chips on US soil The US plans to award more than US$6 billion to Samsung Electronics Co, helping the chipmaker expand beyond a project in Texas it has already announced, people familiar with the matter said. The money from the 2022 CHIPS and Science Act would be one of several major awards that the US Department of Commerce is expected to announce in the coming weeks, including a grant of more than US$5 billion to Samsung’s rival, Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), people familiar with the plans said. The people spoke on condition of anonymity in advance of the official announcements. The federal funding for
HIGH DEMAND: The firm has strong capabilities of providing key components including liquid cooling technology needed for AI servers, chairman Young Liu said Hon Hai Precision Industry Co (鴻海精密) yesterday revised its revenue outlook for this year to “significant” growth from a “neutral” view forecast five months ago, due to strong demand for artificial intelligence (AI) servers from cloud service providers. Hon Hai, a major assembler of iPhones that is also known as Foxconn, expects AI server revenues to soar more than 40 percent annually this year, chairman Young Liu (劉揚偉) told investors. The robust growth would uplift revenue contribution from AI servers to 40 percent of the company’s overall server revenue this year, from 30 percent last year, Liu said. In the three-year period
LONG HAUL: Largan Energy Materials’ TNO-based lithium-ion batteries are expected to charge in five minutes and last about 20 years, far surpassing conventional technology Largan Precision Co (大立光) has formed a joint venture with the Industrial Technology Research Institute (ITRI, 工研院) to produce fast-charging, long-life lithium-ion batteries for electric vehicles, mobile electronics and electric storage units, the camera lens supplier for Apple Inc’s iPhones said yesterday. Largan Energy Materials Co (萬溢能源材料), established in January, is developing high-energy, fast-charging, long-life lithium-ion batteries using titanium niobium oxide (TNO) anodes, it said. TNO-based batteries can be fully charged in five minutes and have a lifespan of 20 years, a major advantage over the two to four hours of charging time needed for conventional graphite-anode-based batteries, Largan said in a
Taiwan is one of the first countries to benefit from the artificial intelligence (AI) boom, but because that is largely down to a single company it also represents a risk, former Google Taiwan managing director Chien Lee-feng (簡立峰) said at an AI forum in Taipei yesterday. Speaking at the forum on how generative AI can generate possibilities for all walks of life, Chien said Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) — currently among the world’s 10 most-valuable companies due to continued optimism about AI — ensures Taiwan is one of the economies to benefit most from AI. “This is because AI is