Reuters/New York Times
January 23, 2012
There are weeks when it can sound as if the European sovereign debt crisis is going around in circles.
Barbed exchanges between the Italian prime minister, Mario Monti, and the German chancellor, Angela Merkel, carry echoes of a prolonged dialogue between Greece and Germany two years ago, when Berlin was resisting calls to bail out Athens. Then, as now, a debt-stricken government pushing through spending cuts, tax increases and economic change pleaded for lower interest rates and stronger European (read German) support to persuade citizens that the pain was worthwhile.
Now, as then, the German chancellor, constrained by public hostility to bailouts and convinced that only market pressure can keep profligate countries on the right path, is turning a deaf ear, saying there is no need to act because no one is requesting aid.
The delay in acting to help Greece in early 2010 undermined the financial markets’ confidence in the 17-nation euro zone and raised the cost of the eventual rescue. But the situation today is not all déjà vu, because Germany has far more confidence in an Italy run by Mr. Monti than it ever had in Greece.
More
No comments:
Post a Comment