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The introduction of eurobonds – joint, aggregate eurozone liabilities – could be part of the solution, if designed properly. There is certainly demand for them in China and other major emerging countries, which are desperate for an alternative to low-yielding US government securities.... But Germany remains opposed on moral-hazard grounds: a joint guarantee of eurozone members' liabilities would strengthen individual national governments' incentive to spend beyond their means. Indeed, this version of eurobonds would fail, both economically and politically. But a different version has begun to gain traction in Germany. The German Council of Economic Experts has proposed a European Redemption Fund (ERF). The plan would convert into de facto 25-year eurobonds the existing sovereign debt of member countries in excess of 60% of GDP, the threshold specified by the Maastricht criteria and the SGP. Steps toward this solution to the short-term debt problem would be paired with implementation of the "fiscal compact," German leader Angela Merkel's proposed solution to the long-term problem.

But this seems upside down. To use eurobonds as the mechanism for eliminating the big sovereign-debt overhang jeopardizes the longer-term objective of eliminating moral hazard: it offers absolution precisely on the 60%-of-GDP margin where countries will have the most trouble resisting temptation. After all, there is little reason to believe that the fiscal compact or proposed "debt brakes" will succeed where the Maastricht criteria and the SGP failed. Rules need a credible enforcement mechanism....It is about German imperialism acquiring a captive market through an undervalued currency, while the poorer countries of Europe have overvalued currencies, the Euro's value being between the two poles of real necessary currency value. Its a mechanism for redistributing wealth from poorer countries to richer ones. Germany wants the benefits of a currency union in this way, but not the responsibility to drag up the poorer nations to its level which it would be obliged to do if it was part of a common state and fiscal union. .... It just shows that capitalism cannot unite Europe because the ruling classes are stuck fast to the nation-state, which is obsolete. Only socialism can do unite Europe.
AMUZING ...ISNT' IT ?...Mrs Merkel warned the policies of the new Socialist president could destroy the eurozone by bringing the sovereign debt crisis to France itself. The bleak assessment came on the eve of an important weekend that will see elections in Greece and France and a key G20 meeting of world leaders in Mexico. "Europe must discuss the growing differences in economic strength between France and Germany," she said. Tensions are running so high that Jean-Marc Ayrault, the French prime minister, was forced to deny that Paris had broken off the Franco-German partnership, following Berlin anger at a Franco-Italian summit in Rome on Thursday. There was a growing sense of crisis in European capitals after David Cameron, the Prime Minister, took part in a tense conference call with Mrs Merkel, Mr Hollande and Mario Monti, the Italian prime minister. ... Well done Merkel for telling this idiot Hollande you might be able to fool your own electorate that everything is rosy but if you expected the Germans to foot the bill for your fantasy growth plan & to bail out your bankrupt banks well you've just had your answer.As one of the German finance ministers said last week "let France & Italy go to the markets on their own with their plans & see how they get on.".Hollande will be the next European leader denying his country require a bailout....I'm sure !