Merkel: Europe in ‘toughest hour since WW2’

From American Thinker.Com

November 14, 2011

Rick Moran

The German Chancellor may be engaging in hyperbole. After all, there was hardly a stick or a stone left standing in much of Europe by 1945 and it took 20 years for the continent’s economies to recover fully.

But make no mistake. If the euro can’t be saved – if the entire “european project” is at risk of collapsing – the economic consequences might plunge the entire world into a financial meltdown that we might be a decade recovering from.


“Europe is in one of its toughest, perhaps the toughest hour since World War Two,” Merkel told her conservative party in Leipzig, saying she feared Europe would fail if the euro failed and vowing to do anything to stop this from happening.

But in a one-hour address to the Christian Democrats (CDU), Merkel offered no new ideas for resolving the crisis that has forced bailouts of Greece, Ireland and Portugal, and has raised fears about the survival of the 17-state currency zone.

“If the euro fails then Europe fails, and we want to prevent and we will prevent this, this is what we are working for, because it is such a huge historical project,” Merkel said in the east German city of Leipzig.

In high drama in Rome, the president of Italy asked former European commissioner Mario Monti on Sunday to form a government to restore market confidence in an economy whose debt burden is too big for the euro bloc to bail out.

There was some respite for the euro on Monday morning after the Italian Treasury paid a record 6.29 percent yield to sell five-year government bonds in the first auction held after Monti was asked to head an emergency government.

Italy, which last week saw its borrowing costs rise sharply past the 7 percent level that has triggered international bailouts of Ireland and Portugal, sold the maximum targeted amount of 3 billion euros ($4 billion).

It appears that the European Central Bank’s intervention in buying Italian bonds worked – it brought the yeilds down to barely manageable levels. But Germans are complaining about the ECB’s purchase of risky paper because it would be German taxpayers who would have to bail them out if things went south.

Meanwhile, the financial bailout mechanism – the EFSF – is denying reports that it had to purchase its own bonds to make up for a shortfall in the sale conducted last week. But the agency also admitted current market conditions will make it impossible to leverage its $440 billion fund to reach the targeted $1 trillion.

Leave a Reply