December 4, 2011
As Angela Merkel prepares for this week’s European Union summit on the euro, a visitor to Berlin is struck by how the German chancellor is struggling to reconcile two powerful forces: her commitment to 50 years of European integration and a deep mistrust of financial markets.
With one eye on the fallout from the global financial crisis, she believes that markets are not always right. Ms Merkel does not believe that markets are necessarily the enemy and she is also acutely aware of the pressure of financial expectations: without a credible deal this week many analysts predict a further decline in eurozone bond markets, or even the break-up of the single currency.
The fraught relationship between Ms Merkel and the financial markets can be explained partly by mutual miscomprehension. A Lutheran brought up in communist East Germany, Ms Merkel shares the view of Nicolas Sarkozy, the French president, that political legitimacy should trump the unelected power of Wall Street and the City of London. Yet France, Germany and other eurozone governments manifestly depend on market confidence to fund the sovereign borrowing required to sustain their economies.
More
No comments:
Post a Comment