August 16, 2011
August 16, 2011
Germany and France are calling on all euro-zone members to enshrine a balanced budget in their constitution, as well proposing a collective “government” led by the EU president.
In one of the most dramatic expansions of state power since the onset of the EU debt crisis, France and Germany have proposed a united euro-zone government to guide the bloc’s finances.
Chancellor Angela Merkel, at a joint press conference Tuesday in Paris with President Nicolas Sarkozy, also proposed giving the new government the power to overrule national governments.
Angela Merkel and Nicolas Sarkozy have had another go at stopping the Eurozone debt crisis from spreading.
The worry is that Italy and Spain may be next in line to fail, while France is also battling to keep its credit score from being downgraded.
However, earlier it was announced that the French and German leaders would not discuss Eurobonds during their meeting in Paris on Tuesday.
Eurobonds are considered the panacea which would save the European economy by spreading the debt burden across the EU, transferring Northern European reliability to the southern states, which are in most financial trouble.
But Germany does not want to risk losing its hard-earned reputation for economic reliability by signing up for the Eurobond.
Meanwhile, influential investors like George Soros are supporting the Eurobonds, saying the only solution for such weak countries as Portugal and Greece is to leave the euro.
The German opposition party, the Christian Democrats, who are currently leading the polls, also believe their country should take responsibility for their neighbors and accept Eurobonds.
The problem is that Germany has already been sucked into the crisis itself with its economic growth skidding to a halt in the second three months of the year.