German Government Thinks Italy Too Big For EFSF To Save (Spiegel)

German Government Thinks Italy Too Big For EFSF To Save -Spiegel (Nasdaq/Dow Jones, Aug 5, 2011):

FRANKFURT -(Dow Jones)- Germany’s government thinks Italy is too big for Europe’s rescue fund to save, Der Spiegel magazine reports in a preview of an article to be published Monday.

The government doubts whether even tripling the size of the rescue fund, known as the European Financial Stability Facility, would enable it to save Italy because the country’s financing needs are so enormous, the magazine reports without naming the source of its information.

European Commission President Jose Manuel Barroso this week suggested increasing the size of the EFSF, which currently has a planned lending capacity of EUR440 billion ($622.9 billion), to help stem Europe’s worsening debt crisis.

German government finance experts believe euro-zone states couldn’t guarantee Italy’s EUR1.8 trillion of sovereign debt without markets considering Germany to be overstretched, Der Spiegel reports.

Germany’s government therefore insists that Italy push through savings and reforms to help it exit the crisis, the magazine reports. It thinks the EFSF should only be used to rescue small and mid-size countries, the magazine reports.

A government spokesman couldn’t be reached for comment in time for publication.

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