Watcher's Council winners: The EU "damned if you do damned if you don't" Edition!....by Mike at TPC

Source

The Euro bond: Now there's an idea!
  
After a period of rising sovereign bond yields in some of the weaker EU members like Spain that was approaching 7% for its 10-year, the solution being pressed to solve the crisis of confidence are Euro bonds. What are Euro bonds?


"...Borrowing costs are rising for many of the single currency's 17-members. Italy, Spain, Portugal and Ireland are among those that must pay sky high interest rates on their debts. But what if France and Germany helped out? What if the biggest economies on the continent agreed to issue euro loans on behalf of all countries in the currency club? A euro loan, or bond, could be issued by one country, but would be underwritten by all of them. Germany would pay more for its debts and Greece would pay less..." (Source)

It's hoped that by providing this lower cost source of funds backed by all of the EU it will ease fears surrounding the unknown risks of a Eurozone break-up that's been causing a run on banks in country's like Greece.

Question: Would Germany ever sign on to taking responsibility for funding growth over austerity for the PIIGS when it was the wild spending of the PIIGS thanks to lower available borrowing costs that helped to bring this crisis on in the first place?

And if Angela Merkel refuses to go along, in part for political and in part for pragmatic reasons, what would happen next to the economies across Europe and by extension the economy of Germany?

Prediction: More rhetoric and promises from the PIIGS that allows Merkel to save face and agree to the Euro bond. Would this solve the Eurozone financial crisis or just prolong it? Stay tuned!

In other words, "damned if you do and damned if you don't" also know as "stuck between a rock and a hard place!"

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