Weekend Economists: What Goes Up....June 1-3, 2012

[Demeter]

41. Merkel Says No Taboos on Euro Reform Steps to Calm Market

PANIC, ANGELA?

http://www.bloomberg.com/news/2012-05-31/merkel-says-no-taboos-on-euro-reform-steps-to-calm-market.html

Chancellor Angela Merkel said there should be “no taboos” in plans to rescue Europe’s single currency and euro-area leaders must step up their efforts to convince financial markets that banks will be shielded.

Merkel said she welcomed recommendations made yesterday by the European Commission, the European Union’s executive body, which included allowing the permanent bailout fund to channel aid directly to banks. Speaking in the Baltic Sea coast city of Stralsund today, the chancellor signaled the EU could work more closely to protect its banks, saying there are “possibilities for greater cooperation.”

“We could certainly make clearer to international financial markets what’s going on in Europe in terms of new institutions and new possibilities in order to relieve the concern that perhaps banks are unstable,” she told reporters. While repeating that leaders should ditch “taboos,” she said some recommendations being discussed would require a change in EU treaties and the trajectory for reforms would be “in the next five to 10 years.”

WHAT MAKES YOU THINK YOU HAVE 5-10 YEARS?

http://www.reuters.com/article/2012/06/01/us-eurozone-germany-idUSBRE84U0M420120601

Deepening crisis forces Merkel to re-examine euro taboos

How far is Germany prepared to go to save the euro zone?

With Greece's future in the single currency bloc in doubt, Spain scrambling to get a grip on its ailing banks and the euro itself in freefall, the question that has preoccupied crisis watchers for over two years is back in focus like never before.

As in previous "crunch" moments during the crisis, coming up with a clear picture of Berlin's intentions is difficult...