STOCK MARKET WATCH -- Tuesday, 12 June 2012

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23. DER SPIEGEL: Merkel Is Now Preparing Germany For Huge Changes To Come

http://www.businessinsider.com/der-spiegel-merkel-is-now-preparing-germany-for-huge-changes-to-come-2012-6

The Germans have taken a lot of abuse in recent months for not being willing to do more to halt the European crisis (either by using its own finances to backstop everyone else's, or by encouraging the ECB to fight the fire with a spray of money).

And it's obvious that the Germans are getting increasingly irritated as being portrayed as the villains in all this (Just look at the illustration in the German newspaper Handelsblatt).
But a new meme is emerging, which might be characterized as the backlash to the anti-German backlash.

In the FT, Gideon Rachman writes: We isolate and overload Germany at our peril. The demands being placed on Germany are "unrealistic."

Consider just one of the proposals on the shopping list: a Europe-wide bank deposit insurance scheme. As a senior Dutch politician who shares the German view, puts it: “We cannot push through a banking union when the French have just cut their retirement age to 60 and we have raised ours to 67.” From the Dutch and German point of view, it is unfair for their citizens to underwrite the banks of countries using their own money to pay social benefits that are more generous than those on offer in Germany or the Netherlands.

This dilemma illustrates why a relatively technical-sounding exercise such as bank-deposit insurance has profound implications for national sovereignty. Once you take a big step towards the mutualisation of debt across Europe, you are forced towards much deeper political union. It is not just the much-discussed need for a European “minister of finance”, with the power to override national governments. To avoid bitter disputes over fairness, you would also need to harmonise European social-security systems. That would be the work of decades.


Read more: http://www.businessinsider.com/der-spiegel-merkel-is-now-preparing-germany-for-huge-changes-to-come-2012-6#ixzz1xZgMKX9N