Germany’s finance minister, Wolfgang Schäuble, echoed Merkel’s comments, saying that common debt would make it easier for governments to avoid pursuing responsible fiscal policies. In any case, he told the newspaper Welt am Sonntag, it would take too long for eurozone countries to amend the treaty on monetary union.
The statements are in tune with public opinion in Germany and some other countries, like the Netherlands. That is not what investors want to hear, however.
Stocks around the world plunged last week amid widespread concern that political leaders were unwilling to take bold steps to address the European sovereign debt crisis, at the same time indicators were pointing to sharply slower growth in Europe and the United States. Any further drop in investor confidence could also put pressure on the European Central Bank, which has been intervening in bond markets to keep borrowing costs for those countries from reaching dangerous levels.
In October, the European Financial Stability Facility, the bailout fund, will be able to buy government bonds. But that may not be enough to keep yields within bounds.
Merkel expressed opposition to euro bonds after a meeting in Paris last week with the France’s president, Nicolas Sarkozy.
Schäuble has said he would be willing to cede some control over fiscal policy to a European finance minister, as Jean-Claude Trichet, president of the European Central Bank, has proposed. But, Schäuble added, “We can only go as fast and as far as we can convince citizens and their representatives in Parliament.’’
Der Spiegel reported the German Finance Ministry had calculated that euro bonds would cost Germany an additional $3.6 billion in interest payments in the first year of issuance, and as much as 10 times that sum each year after a decade.
