Merkel can not save the EU alone, with France out of austerity promoting team

German chancellor Angela Merkel opposed Francois Hollande's attempt to revise the austerity strategy and the EU stabilization pact. Indirectly she said the austerity is not her choice, but it is simply an unavoidable anti-crisis tool for a region with money lack everywhere. Mrs. Merkel is absolutely right. Lowering the living standard will happen anyway, so the well managed austerity reforms are the best and with less pain way to do it. If reforms are stopped or even reversed, the same will happen by other ways - most probably via inflational decrease of the salaries.

But something else is more important at the moment. And it is the fact that Germany alone cannot save Europe. Germany is the biggest and a well growing economy in EU. But its own resources are not enough to save the Euro and the EU as a whole. If France is to leave the austerity-stabilizing team that formulates the most important decisions in EU, so the entire attempt to save the union will collapse. France is a big donor to salvation funds. It is the second economy in Euro-zone, it still has stable position on financial markets. If all this disappears and France becomes part of the problem, instead being part of decision, Germany alone will have no enough energy to save the EU.

In fact in this case Germany will have to save itself. This is so, because without the Germany-France heart of the EU the investors will fall in panic, there will be no one to finance countries like Italy and Spain, and markets will go crazy. In this situation if Germany succeeds to revive its Deutsche Mark and minimize the losses of the chaos that will be in all EU, this will be a great success. So now Mrs. Merkel is may be fighting not only for Sarkozy, but to stop the domino effect which start will be Sarkozy out of power. Merkel well knows Germany is stronger than France, but it is nothing without France.

April 24th 2012

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