The centrality of Germany to the resolution of the Eurozone debt crisis has never been more evident, yet while most member states are proposing one solution, Germany’s answer is different.
Berlin agrees, like most other European capitals, that the markets are irrational and subject to panic unfounded on economic fundamentals. But Angela Merkel disagrees with Spain, Italy, and even France when they protest about unjustified investor pressure. The market is partially right she insists, and each eurozone member must do more. Sharing debt around is not the answer.
“I find it extraordinarily inappropriate that the European Commission today focuses on eurobonds, in different varieties, giving the impression that the debt burden can be shared and that we can get rid of the errors in the structure of the European currency. That’s exactly what will not work,” she said pumping her fist in the German parliament.
An alarm signal for Germany appeared today with the technical failure of the latest government bond sale, which was undersubsribed, only just over 3.5 billion euros of 10-year paper leaving the Treasury instead of the hoped-for 6 billion.