Today’s coordinated effort by global central banks is certainly bullish and another incremental positive for Europe. But behind the scenes the fundamental issues remain. It all boils down to one country’s actions: Germany. There are those who believe Germany is adding fuel to fire by not allowing a full ECB backstop. But can you really blame them? If the ECB was to provide immediate assistance it might reduce incentive for troubled nations to shore up finances. As such, more concrete rules surrounding European fiscal responsibility are likely necessary before Germany cedes control. When this might happen is anyone’s guess, but it needs to happen soon.
Which century is this anyway? We ask because elite opinion is once again blaming Germany for ruining the rest of Europe, if not the entire world economy. All that’s missing are references to the Kaiser or Herr Schicklgruber, but we hope the Germans don’t fall for this global guilt trip. Berlin’s alleged sin is its reluctance to write a blank check to save the euro—either by underwriting a new euro-zone fiscal union, or granting permission for the European Central Bank to buy trillions in sovereign debt. The chant comes in unison from the debtor nations themselves, the bailout caucus in Brussels, an Obama White House concerned about its re-election, and liberal pundits worried that their welfare-state economic model is under assault. Like the “rich” in America who must pay their “fair share,” the Germans are supposed to pay up to save a united Europe…
Read the rest in the Wall Street Journal.
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