Markets, not politicians, run the world - its time for Europe to act

Politicians in the United States, Asia and Europe are watching helplessly as a faceless mass of investors shifts billions of euros and dollars across world markets, dictating future fiscal and economic policy in the process.

US President Barack Obama and European leaders are clearly not in control of the situation – they are merely reacting to the whims of the market herd. German Chancellor Angela Merkel and French President Nicolas Sarkozy's weak assurances from the last euro crisis summit three weeks ago have done little to restore confidence in the monetary union.

The apocalyptic mood hanging over the market is irrational. Economic and fiscal conditions have changed very little in the past two weeks, yet panicked investors and fund managers have been dumping stocks and bonds in favor of "safe haven" alternatives like gold and the Swiss franc.

Therefore, it's high time European policymakers move beyond stop-gap rescue facilities, create a solid monetary fund to assist troubled member states, and harmonize financial policy throughout the eurozone. It's also high time politicians face up to reality and tell their constituents that everyone needs to shoulder part of Europe's debt burden through higher rates of inflation.

If Merkel, Sarkozy and other leaders don't change course, the European monetary union will soon be consigned to history as a failed experiment.

For more: Opinion: Markets, not politicians, run the world | Business | Deutsche Welle | 08.08.2011