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Australian Times


Germany and Italy to Protect Euro at All Cost

August 1, 2012 by Triinu Maran in World with 0 Comments

German chancellor Angela Merkel and Italian prime minister Mario Monti held a conference call on Saturday in which they agreed to do everything necessary to protect euro zone.

Sticking to the euro or letting it go bust? Either way, euro holds the future of the European Union and the health of the world economy in its hands.

Two government leaders, one from the strongest and the other from the weakest economies in Europe stated euro zone member states must fulfill their obligations to this end, as must the European institutions.

Economy experts though have so far disapproved EU’s lack of real political and economic integration to calm the markets and stop the crisis, EU countries must share fiscal, not just a currency and monetary policy. One of the long term solutions involves new treaties and approval by parliaments and voters to create a new system to stop the mess ever happening again.

EU should back up the solvent governments and restructure the debt of those that can never repay it.
Berlin has rejected the idea of ECB buying debts without limits from Italy or other member states in trouble stating it could spark inflation, yet euro zone leaders have agreed to bring down the borrowing costs of Italy and Spain.

So far cutting budget and other austerity measures have been a priority. That could drive weakened economies into recession and, amongst other issues, increase the gap between the Northern and Southern Europe.

Yet many argue that the one-size-fits all monetary policy in euro zone deepens the gap between countries even more and sticking to euro would be more devastating than letting it go – the Interest rates are just too low for Germany, but too high for Spain.

Survey: Germans better off without euro

‘51% of interviewed Germans believe that Germany would do a lot better outside of Eurozone, according to a survey conducted by Bild am Sonntag newspaper.71% believe that Greece should leave euro zone if it can’t fulfill the demands by its creditors.

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