European Union Prods Germany With Fiscal Plan

[alp227]

Source: NY Times

European leaders increased the pressure on Germany to move more aggressively to defend the euro on Tuesday by publishing proposals for a more tightly knit European Union, with phased-in moves toward central banking supervision, unified deposit insurance and more sharing of the region’s debt burden.

Drawn up by the top European Union officials — the European Council president, Herman Van Rompuy; the European Commission president, José Manuel Barroso; the European Central Bank president, Mario Draghi; and the head of the Eurogroup of finance ministers, Jean-Claude Juncker — the plan has weight, and it seems to reflect a new willingness in Europe to isolate Berlin and compel it to accept changes it has steadfastly resisted.

The 10-year “road map” was drafted after months of discussions with the 27 member countries, especially with the 17 that use the euro. It calls for immediate steps “towards a genuine economic and monetary union,” and is meant to provide the agenda for the European Union summit meeting on Thursday and Friday in Brussels. It is also intended to give the financial markets confidence that the European Union will stand behind its members and its common currency — a harder task, given that much of the plan would take many months to negotiate and ratify.

Although watered down from an earlier draft to try to appease Berlin, the proposals brought immediate criticism from Germany, with Chancellor Angela Merkel telling her partners in her governing coalition, the neo-liberal Free Democrats, that Europe would not have total sharing of debt “as long as I live.”

Read more: http://www.nytimes.com/2012/06/27/world/europe/european-union-prods-germany-with-fiscal-plan.html

[DallasNE]

1. Merkel Is An Obstacle To A Solution

Last edited Wed Jun 27, 2012, 09:27 AM - Edit history (1)

She has a Bush like my way or the highway attitude when she rejects this proposal with language like "as long as I live" over a debt sharing proposal when there is no doubt that some form of debt sharing is essential. That is further enforced when a governing partner says this proposal is "heading toward a dead end".

She seems less threatening when she demands "improved oversight" but the devil is in the details. Here she is not talking about regulation, which is necessary, but controls as expressed in a right to reject budgets with too much debt.

The last thing Europe needs to do is appease Berlin. Instead, they need to isolate Germany and hold her up as the obstacle to an improved economy in the Euro Zone. Merkel is still fixated on austerity and that has already been shown to be a failed policy so they need to keep hammering away at why these changes, such as deposit insurance, are vital. The tough part is that time is wasting and the longer this drags out the deeper the hole will be that Europe needs to dig out from and that means bigger deficits rather than austerity. Merkel's path only leads to more stagnation and pain. It is time Germany gets a new leader and elections aren't that far away. So far her party is getting pounded in local elections so the German people may be getting this better than does Merkel.

[4th law of robotics]

3. She really is being obnoxious. Not giving away all of Germany's money with no strings attached

I hate it when people don't just hand me cash for screwing up. It's selfish and rude.

[DallasNE]

5. What's Your Point?

Or do you even have one, other than a derisive, snide comment.

[4th law of robotics]

6. That it is unfair to blame Germany for it's reluctance

to just hand over ever increasing sums of money with no strings attached.

Germany didn't cause this crises. They acted responsibly before and during. Yet they are receiving a decent share of the blame for it all because they are starting to lose enthusiasm for extending endless credit to some teenagers.

[DallasNE]

7. Nobody Is Suggesting That

But you are right that Germany didn't directly cause this. The underlying cause is the toxic, exotic loan packages put together in this country during the housing bubble and sold worldwide. Lack of regulation on the structure of these packages allowed junk to be mixed with good debt and sold as AAA bonds. Why the bonding agencies allowed themselves to be used in this shameful manner still hasn't been fully addressed. Plus corruption and unchecked spending in many of these European countries contributed significantly -- but that should all have been regulated before this happened rather than after the fact. Just don't go off the deep end by claiming "no strings attached".

[dipsydoodle]

2. That was Tuesday. Today, Wednesday,Merkel rejects sharing eurozone debt through bonds again

German Chancellor Angela Merkel has again rejected the idea of pooling eurozone debt through bonds and urged greater competitiveness in the EU.

She told parliament in Berlin that the proposal for "eurobonds" went against Germany's constitution.

"We are working to breach the vicious circle of piling up debt and breaking [EU] rules," she said to applause.

Her speech comes before talks with French President Francois Hollande, and on the eve of an EU summit.

http://www.bbc.co.uk/news/world-europe-18608155

[DallasNE]

4. Such Moribund Thinking

Will prove fatal to the Merkel government in Bonn. It is incredible how people stick to their guns even when faced with a mountain of evidence that demonstrates how failed their ideas are.

[Franker65]

8. Bonn?

I believe the Merkel government is in Berlin. Sure some ministries are still in Bonn but maybe you're thinking of West Germany