The Trouble with Eurobonds
Europe needs to face reality and initiate the difficult adjustment processes within the real economy that are necessary to rebalance the eurozone. Eurobonds would numb the distressed countries’ current pain, but, by failing to treat the underlying disease, they – and the eurozone as a whole – would end up far sicker than before.
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MUNICH – German Chancellor Angela Merkel has withstood the pressure from southern Europe: there will be no Eurobonds. For the markets, this is a disappointment, but there is no other way for these countries to rebuild themselves than to insist patiently on a phase of debt discipline and an end to lax budget constraints.