Thursday 20 October 2011

Gloomy prognosis for eurozone patient.

Even if a deal is stitched up between France and Germany over EFSF leverage, haircuts imposed on holders of Greek sovereign debt and banks recapitalised, the fundamental problem will remain: the divergence of the economies of eurozone countries.  Fiscal and political union is not a panacea.  The old East Germany is still in bad shape economically after re-unification and huge sums spent in an attempt to catch up with the rest of Germany.

The following articles consider these issues:

http://www.spiegel.de/international/europe/0,1518,792641,00.html

http://www.telegraph.co.uk/finance/financialcrisis/8837327/Frances-Nicolas-Sarkozy-and-Germanys-Angela-Merkel-hold-crisis-talks.html    (very gloomy)

http://www.telegraph.co.uk/finance/financialcrisis/8836548/Britain-cant-save-Europe-but-wemight-still-save-ourselves.html  (very, very gloomy)

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