[Max Foster, Cnn Anchor:] The euro or nothing. Greece's prime minister says his country must accept austerity. A lender of last resort, Ireland's European affairs minister tells me it is time for the ECB to step up. And Boeing for gold, a record deal for the plane maker at the Dubai Air Show. I'm Max Foster in for Richard Quest. This is QUEST MEANS BUSINESS. Hello to you. Governments are taking shape here in Europe and the onus is on Italy and Greece to prove this really is a fresh start. So far, frankly, hasn't worked. Stocks have fallen from Berlin to Wall Street. Bond yields are rising. And tonight, Ireland's European affairs minister tells me the only credible solution left is to call in the European Central Bank. Well, first, Greece's new prime minister says the country's only choice is to stay in the euro. Speaking in the last hour, Lucas Papademos announced that the country is at a crossroads. And that swift reforms are needed to correct a worsening recession.
[Lucas Papademos, Prime Minister Of Greece:] Important sacrifices of the Greek people cannot, should not be, lost. Two basic prerequisites so that we win this battle is the truth, and the restoration of trust, confidence. The truth where we are, about where we are, and where we can go. And the trust in our strength and our powers to tackle the-
[Foster:] Elinda Labropoulou joins us now from Athens, via Skype. Elinda, any surprises there?
[Elinda Labropoulou, Journalist:] Not so much. But a very clear message from Lucas Papademos, in terms of what the priorities of his interim government will be. He did say that the first, the top, priority for his government will be to ensure that Greece is able to get the sixth traunch of a bailout plan. He even gave a date for that. He said that the money must be released by December the 15th, in order to cover Greece's needs. The Greek government had already previous said that unless that money is in at that time, Greece could default on its debt. Apart from that, another priority for the government that he did outline is that the final details must be worked out to ensure that Greece goes ahead with a second bailout plan agreed in the end of October. And so Mr. Papademos strongly urged all sides to ensure that by the end of the year these two things have been done. His speech, which was in Greece seen as optimistic, focused a lot also on development. And he did outline a number of plans of how Greece can get out of recession. He did say that Greece will go into recession next year. But he did sort of say that there is a light at the end of the tunnel, by the end of the year, 2012. So, a lot of plans for development that he outlined; how Greece will use its funds from the EU and its lenders, but also he did say that the government will push ahead with the necessary reforms. A number of structural reforms that include a number of austerity measures already decided that have been very unpopular until now, here. But he did say that that is the only way forward for Greece.
[Foster:] Elinda, thank you very much, indeed. Well, though he is not officially in the job yet, the man nominated to be Italy's next prime minister has started work on selecting his government. A former European Commission member Mario Monti is speaking right now, in Rome. He is expected to conclude talks with political parties tomorrow before presenting his new government to the Italian president. Well, even with an internationally respected economist taking charge, investors are still on edge about Italy's precarious debt situation, which we were hoping to show you here. But suddenly a blank screen. Today Italy paid a high price for all of that uncertainty. At its five-year bond auction, here it is, it sold $4 billion worth of notes at round 6.3 percent. And that is the highest rate it has had to pay in more than 14 years. Right now, the yield on Italy's 10-year government bond is sitting at an uncomfortable 6.7 percent. While that is down from last week's record of nearly 7.5 percent; still dangerously high that figure. And all of Europe's major indices fell on all of this news today. Milan's MIB index was one of the worst performers, with heavy losses in the banking sector. Banca Popolare di Milano had-and Unicredit actually-each lost around 6 percent. A downgrade by Moody's was the trigger for Banca Popolare's slide in the share price. And for Unicredit it was a record $14.5 billion Q3 loss. Unicredit says it scrapped it's dividend for the year and plans to cut more than 5,000 jobs by 2015. The bank is planning a $10 billion share sale to boost its capital now. CNN's Matthew Chance joins me now from Rome. Matthew, where are we with Monti's appointment? This is a given, right?
[Matthew Chance, Cnn Senior International Correspondent:] Well, he has formally accepted the offer, the nomination, by the Italian president to try and form a government. The situation now, Max, is that Mario Monti, this distinguished economist, and former EU commissioner is in consultations with the various political parties to try and hammer out an agreement on the make up of his cabinet. He is actually speaking right now to reporters outside the government offices, in the center of the Italian capital. He's been making the point that, first of all, the consultations are not yet over. He has been saying that, you know, he has spoken of the sacrifices that have to be made, in the country to the various political factions and that there are lots of things that the country has to do to get through this situation. He said that the leaders of the political parties with whom he spoke understood the gravity of the situation. He said he also believed, and he is continuing these comments now, that the technocratic government that he is trying to form could go through until the spring of 2013, but he also made the point that it was clear that at any point the parliamentary majority, that it would need to stay in power, could be withdrawn and the government might fall earlier. As I say, what has been spoken about throughout the course of the day is the make up of this cabinet that is going to steer Italy through these very difficult economic times. What Mr. Monti did say is that he does want politicians in his cabinet as well. Perhaps an attempt to give him the kind of political support he is going to need, if he is to get any meaningful reforms through in this country, Max.
[Foster:] And Matthew, he also needs to convince the public, doesn't he? Is there a sense that Europe is in effect installed a bureaucrat in charge of the government. Is that why politicians are also involved there? So at least there is some form of democracy within it?
[Chance:] That, perhaps, perhaps, it will give it some kind of democratic fig leaf. But who know? Because the point is, is that you know the measures that Italy needs to institute to get its economy back on track are going to be very painful, very deep, indeed. They are going to have a real impact on people's lives. We are talking about trying to bring down that massive public debt; $2.6 trillion. It is going to mean huge public service cuts, public spending cuts, rather. It is going to mean huge tax rises. It is going to mean trying bring areas of the gray economy in this country, which is significant, back under government control. And so that is going to mean enormous changes and reforms in this country. And inevitably that is going to mean pain; inevitably in this country it will mean public disorder of some kind. And so those are the sort of public challenges that this government-if it manages to be formed by the end of the week, which is the plan-those are the kinds of challenges that is going to face in the months and possibly the year ahead, Max.
[Foster:] OK, thank you very much. Matthew reporting there, that Mario Monti has accepted that nomination as prime minister. Now the ECB is still trying to do its bit to calm the bond markets. It brought up more than $6 billion of sovereign debt last week. Although that is less than half the amount it bought the week before. We have already heard that analysts have told this show that the ECB is the only institution which can save the day. But it might lack the ability to do so. There are some things it has to do right now. Obviously, it can set interest rates and it can lend money to help liquidity. In the past it has even done that on an unlimited basis. It could also buy bonds, both government bonds and covered bonds, which are a kind of corporate bond, with an extra layer for protection for investors. There is one thing that the ECB can't do right now, though. Not at the moment at least. It can't print money to service public debt. At least that is what the president of Germany's central bank says. Jens Weidman also sits on the ECB council. That would apparently rule out something along the lines of quantitative easing, like we saw in the U.S., and here in the U.K. Well, Angela Merkel is meeting with the Irish Taoiseach, Enda Kenny, on Wednesday. His cabinet is already telling Germany to face facts. Earlier Ireland's minister for European affairs told me it is time to accept the ECB is now Europe's only hope.
[Lucinda Creighton, Irish Minister For European Affairs:] I think it has become more and more apparent over recent months, but specifically since events have begun to unfold in Greece and Italy, in the last two weeks that, you know, unfortunately, it is an enormous challenge to try to beef up the EFSF in the way that was envisaged on the 26th of October. And it now looks like it will require a much more dramatic intervention and that means the ECB. And we would be of the view that the ECB's role has to become more formalized and a much more substantial in all of this. And ultimately I think it is essential that the ECB would be become the lender of last resort, which I think is something that the majority of member states would agree with at this point.
[Foster:] So the European Central Bank effectively underwriting sovereign debt in Europe?
[Creighton:] Which is the function of central banks in most modern economies and I think, you know, what we have seen over the last 18 months, or more, is the very clear manifestation of the reality that the European currency, the euro, has effectively a design flaw. In that it wasn't supported by the kind of architecture that it should have had. And we are now paying the price for that. So, I think it is essential that we get this right. The first priority is to save our currency. Then we need to talk about building an architecture to sustain it in the future. But I thin the obvious step at this stage is that the ECB has to directly intervene. And that will require the support of the member states. Because it is effectively a shift in policy, even though these ECB has buying on the secondary market and has been very important in the role id has played over the last number of months. But that now needs to be formalized and it needs to be stepped up.
[Foster:] Finally, if Germany doesn't agree to allow the ECB to change its role to get more involved. What future for the euro?
[Creighton:] There has to be a future for the euro. The obvious institution that can play a role is the IMF. But it goes back to the point which we have been hearing all along, which is why should members or countries who participate in the IMF support a currency if we are not prepared to do so ourselves. And I think there is a fair question in that. But, I mean, there are other avenues but I think that the only obvious one and the only credible one, really, is that of the ECB.
[Foster:] Well, still very much all eyes on Europe as far as Wall Street goes. Let's check on the number right now, on the Dow. And we are off slightly, at the moment, as you can see, down two-thirds of 1 percent. And it is banking stocks amongst the poorest performers there. They have been some of the most volatile shares lately. And we'll take a longer look at those numbers a little later on in the show. But when we come back we'll hear from Boeing's CEO on striking the biggest deal in that company's history.