Monti Warns of a Potential Breakup of Europe As a Standoff Over European Central Bank Help for Italy And Spain Hardened !

• Monti Warns of a Potential Breakup of Europe As a Standoff Over European Central Bank Help for Italy And Spain Hardened ! 
  By Gregory Viscusi and Rainer Buergin, http://www.bloomberg.com/ 
  Italy’s Prime Minister Mario Monti warned of a potential breakup of Europe without greater urgency in efforts to lower government borrowing costs, as a standoff over European Central Bank help for Italy and Spain hardened.
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  Monti, in an interview with Germany’s Der Spiegel magazine published yesterday, said that disagreements within the 17-nation euro area are detracting from the policy response to the debt crisis and undermining the future of the European Union.
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  “The tensions that have accompanied the euro zone in the past years are already showing signs of a psychological dissolution of Europe,” Monti told Der Spiegel. While he backed the ECB’s willingness to address “severe malfunctioning” in the government bond market, Monti said the problems “have to be solved quickly now so that there’s no further uncertainty about the euro zone’s ability to overcome the crisis.”
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  Spain and Italy, whose surging borrowing costs have shunted them to the heart of the turmoil in the euro area, are resisting pressure from ECB President Mario Draghi to formally request aid in return for strict conditions before the central bank will buy their bonds. Monti and Spanish Prime Minister Mariano Rajoy have both said they will await further details as the ECB works up its plan. The German government said for the first time today that Chancellor Angela Merkel supports Draghi’s proposals.
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  French President Francois Hollande is pushing Monti and Rajoy to request aid from Europe’s bailout fund to help ease markets and protect France from speculation, Italian newspaper la Corriere della Sera reported, without citing anyone. Monti may speak with Draghi today, the newspaper said.
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  Kiss of Death
  “Italy has, to all intents and purposes, been hung out to dry,” Nicholas Spiro, managing director of Spiro Sovereign Strategy Ltd., said in an e-mailed comment. “As far as Rome is concerned any external assistance would be the kiss of death. This puts Mr. Monti in an untenable situation.”
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  Monti isn’t under pressure from Hollande to request international rescue funds and has no plans to meet Draghi today, an Italian government official said, who asked not to be identified because any such discussions would be private.
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  Italian 10-year bond yields fell 6 basis point to 5.98 percent as of 2:15 p.m. in Berlin after rising to 6.28 percent as Draghi outlined his plan on Aug. 2. Spain’s 10-year bond yielded 6.76 percent, down 9 basis points, after rising as high as 7.44 percent. Equivalent German debt yields 1.36 percent. The euro dropped 0.2 percent to $1.2362.
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