As periphery country problems worsen, European leaders come together to try to save the euro. Yesterday’s New York Times suggests that Germany is now open to pooling European debt, though with some strict limitations.
“German officials remain adamant that they are not talking about euro bonds, or jointly issued debt, which they have dismissed as unconstitutional” the NYT writes.
The NYT notes the urgency, citing former German foreign minister and INET Berlin conference speaker Joschka Fischer as saying “the European house is on fire.” And the article mentions George Soros’s recent speech at the Festival of Economics in Trento, Italy, where Soros said that Europe has 3 months to save the euro. “Nothing can be done without German support,” Soros also is quoted as saying.
Felix Salmon at Reuters also examines Soros’s recent speech, focusing on Soros’s suggestion that, as Salmon puts it, the “European-unity project is a bubble, which could burst at any minute.”
But Salmon disagrees that Europe is doomed to fail, suggesting that because the Bundesbank now holds €660 billion in peripheral-country claims, Germany won’t allow the European periphery to collapse lest the Bundesbank face insolvency to the tune of about €1 trillion. This deficit could be taken care of by the reintroduction and printing of Deutschmarks, but Salmon thinks that “a world where the Bundesbank is willing to print €1 trillion worth of Deutschmarks is simply not the world we’re living in, and the Germans will do pretty much anything to avoid that outcome.”
This is the bet Salmon made with Deputy Editor of Business Insider Joe Weisenthal: will Germany allow the periphery to collapse and exit or will Germany try to save the euro? Salmon makes his case – who do you think will win the bet?
Click here to read the NYT article
