One of the things that can “save” the Euro is the creation of a European Nanny State, complete with joint fiscal policy and joint government bonds.
Jean-Claude Juncker, head Euro-Zone finance minister, is in favor of the idea and ECB president Jean-Claude Trichet is agnostic.
However, Jens Weidmann, the head of German Central Bank has ruled out the idea.
Please consider Bundesbank chief slams eurobonds
The head of Germany’s Bundesbank central bank attacked Sunday proposals to issue eurobonds guaranteed by eurozone states as a way of helping Greece, saying it would lead to a “transfer union.”
“Nothing would destroy more quickly and in a more lasting fashion incentives for a solid budget policy that joint guarantees for sovereign debt,” Jens Weidmann told the Bild am Sonntag weekly in an interview.
“But this is exactly what some politicians and economists are proposing in the form of eurobonds as a solution to Greece’s problems,” he said.
“The result would be European taxpayers, and first and foremost German ones, vouching for Greece’s entire national debt. It would be a step towards a transfer union, something which Germany has correctly opposed thus far.”
He also said that restructuring Greece’s mammoth debts would also fail to solve the stricken eurozone country’s problems.
The idea of eurobonds issued and guaranteed by countries with better credit ratings that Greece, therefore obtaining lower borrowing rates, has long been floated as a way of helping Athens and other struggling eurozone members.
But German voters are wary of any scheme that would see their taxes going towards other countries — a so-called “transfer union” — while eurobonds could also raise the borrowing costs of countries backing them, critics say.
A poll released by the Bild am Sonntag meanwhile showed 60 percent of those questioned in Europe’s biggest economy with little or very little trust in the euro single currency, up from 54 percent in December.
One of the proposals on the slate for Thursday is creation of Eurobonds. That proposal is clearly dead-on-arrival.
The 30-year extend-and-pretend option floating around constitutes default, and Trichet insists “no defaults”.
Indeed, there are no solutions only a mountain of unworkable ideas as noted in 30-Year Extend-and-Pretend Plan for Greece, Ireland, Proposed Amid Total Confusion; Plane Crash Looking More Likely
Thursday’s emergency meeting might get interesting.
Mike “Mish” Shedlock
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