Merkel hardens opposition to sharing the pain among nations
GERMAN Chancellor Angela Merkel hardened her opposition to debt sharing in the euro region as President Barack Obama singled out Europe's leaders for not doing enough to arrest the financial crisis.
With Europe's debt crisis cited last week for cancelled IPOs, weaker-than-expected Chinese manufacturing figures and a rise in the US jobless rate, Ms Merkel rejected joint debt issuance in the 17-nation euro area as a solution, saying "under no circumstances" would she agree to Germany-backed euro bonds.
Some "come along and ask for euro bonds, saying all we need are equal interest rates and everything will turn out all right," Ms Merkel said in a speech in Berlin yesterday. Instead, what was needed was an economic overhaul to tackle the lack of competitiveness in Europe, she said.
Ms Merkel, the head of Europe's biggest economy and the largest contributor to bailouts for Greece, Portugal and Ireland, is the pivotal player in efforts to resolve the crisis, now in its third year.
As Spain struggles to avoid calling for a rescue and the euro slides near a two-year low against the dollar, Mr Obama added to pressure on Ms Merkel from the European Central Bank, France and Italy to do more to halt the crisis.
Mr Obama, speaking at a Chicago fundraiser on Friday as he bids for re-election in November, said that a report showing the slowest month of US employment growth in a year was in large part "attributable to Europe and the cloud that's coming over from the Atlantic".
"Europe is having a significant crisis, in part because they haven't taken as many of the decisive steps as were needed to deal with the challenge," he said at a separate event in Minneapolis.
The president's point person for the European crisis, Lael Brainard, Treasury undersecretary for international affairs, ended a three-day tour of Europe's crisis capitals the same day as work continued on erecting a financial firewall to stem contagion. The European Union is targeting July 9 as the start date for its permanent rescue fund, the €500bn European Stability Mechanism, an EU official said.
Ms Brainard held meetings with officials in Athens, Madrid, Paris, Frankfurt and Berlin in a week when investors flocked to the perceived safety of German and US bonds.