Monday, May 7, 2012

Challenge to Austerity, And Germany, Is Sharpened

Wall Street Journal
May 7, 2012

Europe's voters delivered another rebuke to their leaders Sunday for failing to overcome a debt crisis that has thrust much of the region into an economic tailspin.

Less obvious is what Europeans expect their governments to do differently. From Greece to France, incumbents lost power—joining a long list that includes the former leaders of Spain and Italy. But their successors will likely find it difficult to pursue policies that deviate much from the austerity-focused course championed by Germany, Europe's paymaster.

As Europe's only healthy large economy, Germany's support would be essential for any change. And Chancellor Angela Merkel and her government, fearful of popular resistance in Germany, have made clear in recent weeks that they wouldn't soften their austerity demands, no matter who won Sunday's elections.

"We will remain as tough on these issues as before," said Volker Wissing, a financial-policy expert for the Free Democrats, the junior coalition partner in Ms. Merkel's government. "We are fighting for currency stability. There is no possibility to soften the currency with Germany."

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