Merkel fans the flames

Merkel is set to bring Europe to its knees with her misguided view that structural reforms and austerity will "normalize" Europe's debt costs. Bloomberg:

Merkel rejected French calls to deploy the ECB as a crisis backstop. “If politicians believe the ECB can solve the problem of the euro’s weakness, then they’re trying to convince themselves of something that won’t happen,” Merkel said.

Even if reforms and austerity would work eventually, denying the markets an urgent and critical backstop much longer will lead to a financial meltdown, undoing decades of European integration. The financial systems' vital signs - interbank lending, interest rates, money supply to name a few are in critical territory. Her comments along with those of other German government officials have served to increase spreads and risk aversion.  


By all means, let the summitry continue, but not with the patient on life support. Here is to hoping that Merkel will reverse her decision quickly as she has done in the past when reality intruded on her poor judgement and not veto an expanded ECB mandate.