Wall Street Journal
January 4, 2011
The Christmas truce is over and the battle between the financial markets and the euro-zone managers resumes. If understanding your enemy is essential to victory, the euro zone starts at a disadvantage. The disparate group that makes up the euro-zone general staff just doesn't understand how markets work. So when German Chancellor Angela Merkel and French President Nicolas Sarkozy announced that starting with the 2013 campaign they would inflict losses on investors, they were surprised that the counter-attack took the form of a sell-off of bonds and a rise in interest rates.
Now the battle recommences—between enemies who fail to realize that they need each other. The euro-zone army needs the market to provide capital, and the markets need the euro-zone generals to provide certainty and stability so that they can invest in relative safety.
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