Guardian
November 8, 2011
As Italy finds itself in the same ante-room to bankruptcy already used by Greece, Ireland and Portgual, so the spotlight falls back on Germany and the Berlin government's adoption of the moral high ground.
Let them all go to the wall, appears to be the message from Angela Merkel's team. If they cannot live within the new rules on spending cuts and labour market reforms then they must live without EU money. Without EU money, as we know, there is no future because private investors demand an ever higher price for their support in the form of unaffordable interest payments.
There are many observers who argue German thinking is forgivable, trapped as it is by fears of a return to 1920s style hyper-inflation. Lending money freely to already indebted nations worsens the mismatch between demand and supply and triggers inflation. This century also had its lessons in the ravages caused by loose credit rules.
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