Ms. Merkel's government is now advocating its own rules that pander to the electorate— the ill-advised short-sale bans of last week—and others that would provide for oversight and sanctions for countries that violate spending and deficit rules.
This approach is solely German-centric.
The political reality in Germany makes it nearly impossible for Chancellor Merkel to endorse pan-European reforms that would impinge on German financial/economic superiority.
The Club Med members of the European community allowed wages to rise substantially under cover of low interest rates that were really Germany's to claim. Asset price bubbles and financial excesses flourished and drove the southern economies (and Ireland). Germany kept wages in check to foster their competitiveness. When the bubble burst, Germany was left standing and having fostered an industrial edge the last ten years, they are not going to/should not sacrifice their hard earned advantage to bail others out.
Germany is contributing some $40 billion to the bailout effort.
In a short time, the Merkel government will propose domestic budgetary cutbacks of some $10 billion. If the voters haven't focused on this yet, they soon will. $40 billion to bail out profligate nations and cut $10 billion at home is not going to go down well. The voters are right to say, "We're paying what?"
But they aren't the only ones.
The International Monetary Fund is kicking in some $250 billion to the effort. The US "owns" 17% of the fund but for some reason foots a little over 20% of the tab. So the US, over time, will be kicking in $50 billion to the rescue. That's more than Germany, and, the last I checked, we were running a trillion dollar (plus) deficit. Someone is crazy here.
Jean-Claude Trichet was quoted the other day as saying the euro was not in danger. I beg to differ.
The Euro is in big danger. German patience, if it can be called that, will reach the limit.
The US voter should realize we are bailing out the euro zone, and who signed up for that?