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France, Italy's challenge to German austerity demands causing turmoil

Bankers, economists also pleading with the conservative Germans to let the ECB pump more money into the system

Published Fri, Oct 17, 2014 · 09:50 PM

London

THE big question facing the shaky eurozone populace is whether the French and Italian rebellion against German austerity demands will succeed.

Such is the uncertainty that the faltering region, which has had a two-year respite from crisis, is once again causing turmoil in markets and threatening global economic recovery. It is hoped that European leaders will be open to ideas from their Asian counterparts at a two-day summit in Milan.

Former US Treasury Secretary and Harvard economist Larry Summers stressed in a recent Washington debate with German Finance Minister Wolfgang Schäuble that a change in policy to avert a Japanese-type deflationary recession is urgently needed. Mr Summers said Europe, and Germany in particular, should invest in infrastructure, which would "pay for itself" by lowering sovereign debt burdens. Mr Schäuble, however, refuted com…

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