Germany must make its choice - by Martin Callanan

Germany is fast approaching decision day. It has two choices: to forge a new European transfer union with inexorable fiscal shifts from northern Europe to the south; or to allow some countries to leave the eurozone, to devalue, and possibly default.  Both options are the political equivalent of jumping off a cliff for Chancellor Angela Merkel. 

However, the current policy of short-term bail-outs and inadequate firewalls, coupled with crippling austerity, will not work. For decades, the foundations of the Greek economy have been sliding into the abyss. The building cannot be repaired with a lick of paint. German policy is greatly misguided if it believes it can turn Greeks into Germans overnight. 

It is becoming increasingly clear that the European Commission, and the International Monetary Fund (IMF), want Germany to take the first option and put its money where its mouth is. But it is also increasingly clear that German taxpayers are not prepared to prop up countries that have failed to undertake the structural reforms that have seen German industry remain competitive. I have a great deal of sympathy for them.

For more: Germany must make its choice | European Voice

Another EU summit: A step in the right direction?

A debt write-down for Greece, bank recapitalization, and leverage for the European Financial Stability Fund (EFSF) are all included in a raft of measures Europe is considering as it prepares to tackle the debt crisis. The proposals are the result of a three-day marathon of European Union talks, the likes of which Brussels had never seen before.

The measures are not only about managing sovereign debt and shoring up the financial sector. They could also decide European Union's long-term fate, which is why policymakers are under pressure to unveil something special when they present their official proposal for adoption at the next summit on Wednesday.

Michael Hüther, the head of the Cologne Institute of Economic Research, said an end to the eurozone crisis could be in sight - as long as Europe honors the suggestions put on the table on Sunday.

For more: Another EU summit: A step in the right direction? | Business | Deutsche Welle | 25.10.2011

Look who is calling the kettle black: Obama calls on Europe to resolve debt problems

In a rare public expression of criticism aimed at America's transatlantic allies, US President Barack Obama has called on European leaders to develop a "more effective set of coordinated policies" to deal with the continent's sovereign debt crisis. 

"Right now you have a single currency, but you don't have a single set of economic policies, and that's created great difficulty," Obama said in reference to the eurozone. "It's difficult to coordinate when you have that many countries with different politics and different economic situations trying to agree on a common course."

Speaking to a group of Hispanic journalists at the White House on Monday, Obama said Greece was "obviously the biggest immediate problem" and that the government there was "taking some steps to slow the crisis but not solve the crisis."

For more: Obama calls on Europe to resolve debt problems | Europe | Deutsche Welle | 13.09.2011