Van Rompuy Proposes Single Bond, and is Rebuffed by Germany

eurointelligenceHerman van Rompuy last week proposed a single European bond to finance ministers, according to FT Deutschland, but said the response had unenthusiastic, citing Christine Lagarde. The paper said Germany vehemently opposed such a bond on the grounds that it would increase domestic borrowing costs. Likewise, van Rompuy said Germany’s proposals for an orderly bankruptcy of member states have no support in the eurogroup. So it looks we are stuck. The paper said van Rompuy had four priorities: early fiscal planning, reform of the sanctions regime, internal imbalances, and crisis resolution.

At each others throats

It looks as though we have reached the moment when EU leaders are making the straight transition from complacency to panic, as Jose Manuel Barroso now starts to attack Angela Merkel, his protégé, for failing to explain the politics of the euro rescue package. He did so in an  interview in Frankfurter Allgemeine, in which he also criticised the German government’s proposals for a reform of the stability pact as “naive” on the grounds that there is no way the EU is going to withdraw voting rights from fiscally irresponsible governments. (On this point, we are in rare agreement with Barroso. Merkel and her incompetent advisers keep on making unbelievably silly proposals, including most recently the financial transactions tax. Barroso’s intervention tells us that they are beginning to panic over the fact that there latest “historic” rescue package has also completed failed to resolve anything).

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Teutonic tectonics?  What is Germany trying to build, a new European order?