Last weeks EU summit decisions were heralded as the saviour for the ailing euro, but as usual they were announced in great fanfare but very little detail on how they were to be achieved. In fact all we heard of since then, was how the Finns and Dutch aren’t happy, the Germans and Irish are awaiting decisions from the courts on how constitutional the ESM is and many more hurdles.

All along the Germans have been largely accepting of Merkels decisions but a large number of German economists have criticised the EU summit through an open letter.

Tens of German economists have signed an open letter that warns about the decisions made by the eurozone leaders at last week’s summit aimed at saving the euro currency.

The letter published by the Frankfurter Allgemeine Zeitung, signed by more than 170 mostly German economists, expressed “great concern” about the decisions taken at the summit.

The economists say the adopted decisions are a “step towards a banking union, which means collective liability for the debts of all banks in the eurozone.”

They argued that this would mean the citizens of countries like Germany, which have strong economies, could end up paying other countries debt.
“Banks’ debts are nearly three times higher than government debts,” the letter added.
The economists said that “the taxpayers, retirees and savers in the so-far solid countries of Europe must not be made liable for backing these debts, particularly since gigantic losses are foreseeable from financing the southern countries’ inflationary economic bubbles.”

Typically the political response to numerous economists telling you that economically you are doing the wrong thing is to ignore them, because after all the EUssr comes first.

However, German Chancellor Angela Merkel has rejected the letter, calling it out of hand.

During the eurozone’s summit on June 29 in Brussels, leaders of the bloc’s leading economic powerhouses agreed to directly support the struggling banks and bring down the borrowing costs for the stricken member-countries such as Italy and Spain.

Backing the idea of a single banking authority at the end of the Brussels Summit, Merkel said that it was needed to prevent government debt from piling up.

Source: PressTV

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