Trying to Understand the problems of the EuroZone (EuroItelligence)

While Strauss-Kahn understands the problems of the eurozone, von Rompuy does not

08.06.2010

At the eurogroup meeting Herman von Rompuy presents his priorities for reforming the eurozone governance: a new stability pact and an agenda to reduce current account imbalances; The assumption here is that imbalances are entirely structural and only the problem of deficit countries; The IMF advocates a more comprehensive response in its Article 4 conclusions, calling for policy actions also from surplus countries; Bond yields are rising in the eurozone despite ECB bond purchases; Germany presents its austerity package for 2011-2014 with a cumulated spending affect of €26.6bn; Biggest saving items are reduction in welfare payments, further job cuts in the public sector, reductions in subsidies, a new tax on nuclear energy and a budget cut for the Bundeswehr by €2bn; Gunter Nonnenmacher argues that this austerity programme marks the true beginning of the coalition; Jean Quatremer worries about the impact of the German austerity package on Europe; Thomas Klau argues that Merkel has chosen at the national context rather than the European to reclaim leadership; A diner between Merkel and Sarkozy has been postponed; Jeffrey Sachs, meanwhile, says that Keynesianism has experienced its last hurrah during this crisis.

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