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How Italy's Mario Monti stared down Germany's Angela Merkel

These are stories Report on Business is following Tuesday, Aug. 7, 2012.

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Monti vs. Merkel
The Wall Street Journal has a wonderful take today on how Italy's Mario Monti is taking on Germany's Angela Merkel, who has ruled the euro zone with her demands for austerity and budget discipline.

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Mr. Monti, of course, took over from former prime minister Silvio Berlusconi and has, according to the report, become the monetary union's prime force in opposing his German counterpart's standard operating procedure during some three years of crisis.

His approach, the news organization says, may yet usher in a move by the European Central Bank to buy Spanish and Italian bonds, helping to drive down their yields, despite Germany's objections.

The ECB signalled last week it wants to take such action, but has to convince Germany's Bundesbank first.

The Journal today describes how Mr. Monti, who has been in the job for less than a year, stared down Ms. Merkel during a June summit that ran through the night. If she didn't at least partly give in, he warned, he would oppose all deals.

"This is not helpful, Mario," Ms. Merkel told him, according to the report.

To which he responded: "I know."

There was a compromise at the meeting, though Mr. Monti didn't get everything he was seeking. Still, he has become the challenger in the 17-nation euro zone to the rule of Germany.

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There's a lot at stake for Italy. Its borrowing costs have surged and its economic troubles have worsened. Today, the government reported that Italy's economy shrank 0.7 per cent in the second quarter, marking the fourth consecutive three-month period of contraction.

Bank rejects allegations
Shares of Britain's Standard Chartered Bank plunged today after allegations by regulators in the United States that it concealed billions of dollars in dealings with Iranian banks.

The Department of Financial Services in the United States is considering revoking its licence.

Standard Chartered today rejected the allegations, saying that "the group does not believe the order issued by the DFS presents a full and accurate picture of the facts."

Building permits slip
Construction plans slipped in Canada in June, more than reversing a hefty increase in May, though the residential part of the market still appeared to be going strong as the first half of the year wound down.

Building permits slipped 2.5 per cent in June, according to Statistics Canada today, largely because of declines in both the residential and non-residential sectors in British Columbia and Alberta.

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But in the residential sector, permits climbed by more than 4 per cent, for the second consecutive monthly gain.

For single-family homes, permits rose more than 5 per cent, and for multi-family units, such as condos, 3.6 per cent.

Today's report adds to evidence of a slowdown in British Columbia, notably Vancouver, where the decline was "primarily attributable to construction intentions for institutional buildings and, to a lesser extent, multifamily dwellings, which had recorded large increases in May."

Keep in mind that building permits are volatile and, in this case, running a few months behind.

In Toronto, for example, the other market where condos are a concern, permits continued to run strong, largely on singles, semis and row houses.

"Housing starts could show some resilience early in Q3. That said, we continue to expect starts (and the contribution of residential construction to GDP) to moderate in the second half of the year, particularly with new mortgage rules biting into demand," said senior economist Krishen Rangasamy of National Bank Financial.

Regulator looks at BCE-Astral deal
Canada's Competition Bureau says it's "actively reviewing" concerns about BCE Inc.'s proposed $3- billion purchase of Astral Media Inc. raised by a trio of its smaller cable competitors in eastern Canada, The Globe and Mail's Sean Silcoff reports.

Commissioner Melanie Aitken said the bureau is aware of concerns being raised by the cable companies, which came out swinging earlier today against the deal. They argued it would give  the telecommunications giant too much control over what Canadians watch on television and what they pay for it.

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About the Author
Report on Business News Editor

Michael Babad is a Report on Business editor and co-author of three business books. He has been with Report on Business for several years, and has also been a reporter and editor at The Toronto Star, The Financial Post and United Press International. His articles have appeared in major newspapers around the world. More

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