Monday, March 5, 2012

The German Economic Establishment Has Lost All Sense of Proportion ...

... and Sarkozy has tied himself to its coattails. Here is Wolfgang Munchau (via Paul Krugman):

But there is no appetite for any of this in Germany. Instead, the Bundesbank prefers to solve the problem by addressing the funding side. Mr Weidmann proposed last week that Germany’s Target 2 claims should be securitised. Just think about this for a second. He demands contingent access to Greek and Spanish property and other assets to a value of €500bn in case the eurozone should collapse. He might as well have suggested sending in the Luftwaffe to solve the eurozone crisis.
Munchau's bottom line:
What people are really saying is that they no longer want a monetary union. They want a looser single currency regime.

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