Germany slams 'stupid' US plans.

The stock market euphoria of today may come to a grinding halt tomorrow and be replaced with a severe dose of depression.  Germany and the US are at loggerheads over the proposal to use the bail-out machinery (EFSF) beyond its €440bn lending limit by deploying leverage to up to €2 trillion, perhaps by raising funds from the European Central Bank.

See: http://www.telegraph.co.uk/finance/financialcrisis/8793010/Germany-slams-stupid-US-plans-to-boost-EU-rescue-fund.html

The real problem, which is not being addressed, is not that of sovereign debt but of the euro itself.  It is a classic case of 'one size does not fit all'.  Such is the disparity between the efficiency of the economies of different countries there is little likelihood of convergence without serious political and social disruption.  Greater fiscal and political union will not overcome the problems.  What is needed is for an orderly withdrawal from the euro of states with the poorer economies.

What is noticeable is how quiet the French and the EU have been in recent days, eerily so.

The following article by Paul Mason is interesting:

http://www.bbc.co.uk/news/business-15076896

I was struck by the following paragraph:

The one logical move - to create a fiscal and political union - is not going to fit the time scale even if the north Europeans who will pay for it can be persuaded.

It is only 'logical' where countries have converging economies.  Fiscal and political union will not work if all the existing members remain in the euro.  The suggestion from the EU that Greece will be bailed out but remain in the euro will consign citizens of that benighted country to eternal austerity. poverty and civil unrest.  But what does the EU care as it seeks to protect its precious progress to fiscal union of the eurozone and further EU integration?  The problem for Mason and the BBC is that the corporation was one of the cheerleaders for the euro and the EU.

Update: http://www.telegraph.co.uk/finance/financialcrisis/8796934/Stop-asking-Germany-to-pay-and-you-might-save-the-euro.html