Don't overburden German economy -- Merkel
German chancellor Angela Merkel yesterday warned against overburdening the German economy in efforts to save the eurozone.
Addressing parliament in Berlin, she said there were no "miracle solutions" to the eurozone crisis, even as the yields on benchmark Spanish 10-year bonds climbed above 7pc, a level seen as unsustainable by analysts. Ms Merkel repeated her refusal to back calls for common eurozone bonds and creating a Europe-wide deposit guarantee scheme for banks, backed by French President Francois Hollande, Italian Prime Minister Mario Monti and Spanish Prime Minister Mariano Rajoy.
Such proposals were "counterproductive" and would violate the German constitution, she said. Instead, she called for gradual steps towards the "Herculean task" of building a European political union.
"It is our task today to make up for what was not done (when the euro was created in 1999) and to end the vicious circle of ever new debt, of not sticking to the rules," Ms Merkel said.
She warned against overstraining the resources of Europe's biggest economy, saying: "Germany is strong, Germany is the economic engine and Germany is the anchor of stability in Europe.
"I say that Germany is putting this strength and this power to use for the well-being of people, not just in Germany but also to help European unity and the global economy. But we also know Germany's strength is not infinite."
Ms Merkel has long sought to counter calls for hasty palliatives for the EU's malaise, preferring the longer route towards a tighter political union.
US Treasury Secretary Timothy Geithner said the world would be looking to Germany and other EU countries to provide clarity on plans for a eurozone banking union, a financial firewall and how Europe can revive economic growth.
But he said it would be unfair to see Germany as the sole source of the problem in the eurozone.
"Germany is saying make monetary union work. We are prepared to be behind this broader endeavour, you need to be in support of reforms," Mr Geithner told the Council on Foreign Relations in Washington, adding that other countries needed to move toward Germany's position.