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Friday, December 16, 2011

Having said that...

More optimism from the (reportedly europhile) BBC:
Here is the simple equation which makes it quite hard to be optimistic about what lies ahead for the eurozone: the stability of the eurozone probably requires Germany to underwrite more-or-less all eurozone sovereign debts, to end the contagion from weak sovereigns to weak banks; but that won't happen unless and until there is an all-powerful finance minister (in effect) for the whole of the eurozone, to reassure Germany and the German people they wouldn't be throwing good money after bad.
Or to put it another way, unless a country like France is prepared to make a much greater sacrifice (for the good of the currency union) of its own government's budget-making powers than it currently seems prepared to do, it is quite hard to paint a rosy picture for the eurozone.

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