The latest this-time-we-mean-it EU summit starts tomorrow. Angela Merkel will be under pressure to commit Germany to (effectively) underwrite the euro-zone’s liabilities. She’s not going to that until she is able (with some sort of plausibility) to claim that she has not just handed a blank German checkbook over to a bunch of spendthrifts. Good luck with that.
Making matters more difficult still for her, it appears that increasing numbers of Germans are waking up to what they are being asked to do. Via Open Europe here’s MP Gerda Hasselfeldt of the CSU (the more conservative half of the governing CDU-CSU). A pooling of liabilities between euro-zone members would, she has said, be “a betrayal of German interests… It would not be right for the deposits of German savers to be put at risk from the misconduct of banks in other countries”.
Indeed it would not, and it’s not likely to happen (at the very least for a while), but the market-soothing alternative for now is, uh,….