The clock is ticking. Germany continues to resist a greater European Central Bank role while promoting stronger fiscal responsibility. It pushes for change in the name of greater EU unity, but unity means stronger nations must be willing to help troubled nations when the need arises. None of the proposed legislation in Europe provides a short-term solution to the current debt crisis – that part will have to come from the ECB. The longer it remains on the sidelines the greater the damage.
Panic is beginning to overwhelm the eurozone. Italy and Spain are caught in the maelstrom. Belgium is slipping into the danger zone. As France is dragged down, the widening gap between its bond yields and Germany’s is severely testing the political partnership that has driven six decades of European integration. Even strong swimmers such as Finland and the Netherlands are straining against the undertow. Banks are struggling to stay afloat – their capital providing little buoyancy as funds drain away – while businesses that rely on credit are in trouble, too. All signs point to a eurozone recession.
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