Does Merkel Need a 'Lehman Crisis' to Save Euro?

[dkf]

In 2010 former US Treasury Secretary Hank Paulson admitted that if had not allowed Lehman Brothers to fail, he would have not been able to win approval for the Troubled Asset Relief Plan (TARP) -- the bailout of the country's banks -- from Congress.

"We didn't have TARP without Lehman Brothers," Paulson said.

The idea that Paulson needed a crisis in order to solve a bigger crisis could be seen by some as a post-game rationalization by the former official, but it raises some interesting questions for German Chancellor Angela Merkel and Europe's ongoing sovereign debt crisis.

The Chancellor finds her government in a very difficult position. Under pressure from her own voters not to throw more domestic tax money at efforts to buttress the finances of foreign countries like Greece, Italy and Ireland, Merkel is being heavily criticized by those who believe she needs to sign off on a Eurobond in order to draw a line under the debt crisis once and for all.

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