Confirming Germany’s worst fears

Can euro bonds save the union?

Desmond Lachman

Hope springs eternal among policy makers in Europe’s beleaguered periphery. At five minutes to midnight in Athens, and with a bank run having started in Madrid, these policy makers cling to the forlorn hope that somehow Germany is going to relent on its strong opposition to euro bonds. And they do so despite the deterioration in the economic and financial situation of the periphery, which is now validating Germany's worst fears about the potential costs to Germany of signing up to a scheme that would effectively involve a German guarantee of sovereign borrowing in the European periphery.


The American Entreprise Institute